Oriole Leasing Company signs an agreement on January 1, 2025, to lease equipment to Pharoah Company. The following informationrelates to this agreement.1.2.3.4.5.The term of the non-cancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6years.The cost of the asset to the lessor is $291,000. The fair value of the asset at January 1, 2025, is $291,000.The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of$29,100, none of which is guaranteed.The agreement requires equal annual rental payments, beginning on January 1, 2025.Collectibility of the lease payments by Oriole is probable.Click here to view factor tables.(a)Your answer is correct.Assuming the lessor desires an 8% rate of return on its investment, calculate the amount of the annual rental payment required.(For calculation purposes, use 5 decimal places as displayed in the factor table provided and the final answer to O decimal places e.g.5,275.)Amount of the annual rental payment $54612 Prepare an amortization schedule that is suitable for the lessor for the lease term. (Round answers to O decimal places e.g. 5,275.)ORIOLE LEASING COMPANY (Lessor)Lease Amortization ScheduleDate1/1/251/1/251/1/261/1/271/1/281/1/291/1/3012/31/30Annual Lease Payment PlusURV$List of AccountsInterest on LeaseReceivableRecovery of LeaseReceivable$Lease RecI

Lease is an agreement where one party acquires the right to use of asset in exchange of some rental…

Answered: Oriole Leasing Company signs an…

Oriole Leasing Company signs an agreement on January 1, 2025, to lease equipment to Pharoah Company. The following information relates to this agreement.

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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Concept explainers

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

Question

Oriole Leasing Company signs an agreement on January 1, 2025, to lease equipment to Pharoah Company. The following information
relates to this agreement.
1.
2.
3.
4.
5.
The term of the non-cancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6
years.
The cost of the asset to the lessor is $291,000. The fair value of the asset at January 1, 2025, is $291,000.
The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of
$29,100, none of which is guaranteed.
The agreement requires equal annual rental payments, beginning on January 1, 2025.
Collectibility of the lease payments by Oriole is probable.
Click here to view factor tables.
(a)
Your answer is correct.
Assuming the lessor desires an 8% rate of return on its investment, calculate the amount of the annual rental payment required.
(For calculation purposes, use 5 decimal places as displayed in the factor table provided and the final answer to O decimal places e.g.
5,275.)
Amount of the annual rental payment $
54612

Prepare an amortization schedule that is suitable for the lessor for the lease term. (Round answers to O decimal places e.g. 5,275.)
ORIOLE LEASING COMPANY (Lessor)
Lease Amortization Schedule
Date
1/1/25
1/1/25
1/1/26
1/1/27
1/1/28
1/1/29
1/1/30
12/31/30
Annual Lease Payment Plus
URV
$
List of Accounts
Interest on Lease
Receivable
Recovery of Lease
Receivable
$
Lease Rec
I

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