Help with questions 14,15,16,17 **14. Lease Recording on Signing Date**On January 1 of Year 1, Tarazi Company leased a truck for a 9-year period under an operating lease and agreed to pay an annual lease payment of $10,000 at the end of each year. The first $10,000 payment will be made on December 31 of Year 1. Which ONE of the following is recorded on the date of the SIGNING of this lease contract on January 1 of Year 1?- [ ] Leased Asset of $10,000- [ ] Leased Asset of $90,000- [ ] Lease Liability of $90,000- [x] No asset or liability is recorded on the lease signing date.- [ ] Lease Liability of $10,000---**15. Lease Liability Reduction**On January 1 of Year 1, Kamili Company leased a truck for a 7-year period under a capital lease and agreed to pay an annual lease payment of $6,000 at the end of each year. The interest rate associated with this capital lease is 12% compounded annually. The cash price of the truck is $27,383. On December 31 of Year 1, the first $6,000 payment was made as scheduled. Which ONE of the following is recorded upon the payment of the first $6,000 payment on December 31 of Year 1?- [x] REDUCTION in Lease Liability of $2,714- [ ] REDUCTION in Lease Liability of $6,000- [ ] REDUCTION in Lease Liability of $24,669- [ ] REDUCTION in Lease Liability of $3,286- [ ] REDUCTION in Lease Liability of $12,000---**16. Interest Expense Calculation for Capital Lease**User Company leased computer equipment from Owner Company on January 1 of Year 1. The computer equipment has an expected useful life of 15 years with no expected salvage value. The terms of the lease require annual payments of $10,000 at the end of each year for 15 years, with the first payment being made on December 31 of Year 1. The interest rate used in computing the lease payments is 12% compounded annually. User Company is accounting for this lease as a capital lease. [Note: Round your calculations to the nearest dollar.] Compute the INTEREST expense associated with this capital lease

Here asked for multi sub part question we will solve first three sub part question for you. If you need additional kindly repost with mention the required details. Lease Liability Company engage in the lease system which reduces the cost which are incurred in the form of capital cost and improve the profitability of the business as well. Lease has two types are there one is operating lease and another one is finance lease.14) Correct Answer = 3rd Option = Lease Liability of $90000 Explanation Here Term of Lease Period = 9 Years Annual Lease payment = $10000 No imputed interest in the transaction Recorded in the signing of lease agreement on January 01 = 9 * $10000 = $9000015) Correct Answer = 2nd Option = Reduction of lease liability of $ 24669 Explanation Here Total Cash Price of Truck = $ 27383 Interest Rate = 12% Interest Cost = $ 27383 * 12% = $ 3286 Annual Payment = $6000 Principal Amount = $ 6000 - $ 3286 = $ 2714 Balance Lease Liability = $ 27383 -$ 2714 = $24669 16) Correct Answer = $ 8173 Explanation Here Useful life = 15 years Annual Payment = $10000 Interest % = 12% Calculation of Present Value of Lease = PV(12%,15,10000,0,0) (excel formula) = $ 68108.64 Interest Cost for Year 1 = $ 68108.64 * 12% = $8173

Business

Accounting

On January 1 of Year 1, Tarazi Company leased a truck for a 9-year period under an operating lease and agreed to pay an annual lease payment of $10,000 at the end of each year. The first $10,000 payment will be made on December 31 of Year 1. Which ONE of the following is recorded on the date of the SIGNING of this lease contract on January 1 of Year 1? O Leased Asset of $10,000 O Leased Asset of $90,000 O Lease Liability of $90,000 O No asset or liability is recorded on the lease signing date. O Lease Liability of $10,000

On January 1 of Year 1, Tarazi Company leased a truck for a 9-year period under an operating lease and agreed to pay an annual lease payment of $10,000 at the end of each year. The first $10,000 payment will be made on December 31 of Year 1. Which ONE of the following is recorded on the date of the SIGNING of this lease contract on January 1 of Year 1? O Leased Asset of $10,000 O Leased Asset of $90,000 O Lease Liability of $90,000 O No asset or liability is recorded on the lease signing date. O Lease Liability of $10,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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