Rand Medical manufactures lithotripters. Lithotripsy uses shock waves instead of surgery to eliminate kidney stones. Physicians'Leasing purchased a lithotripter from Rand for $2,450,000 and leased it to Mid-South Urologists Group, Incorporated, on January 1,2024.Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. FVA of $1. PVA of $1, FVAD of $1 and PVAD of $1)Lease Description:Quarterly lease paymentsLease termNo residual value; no purchase option$159,882-beginning of each period5 years (20 quarters)5 yearsImplicit interest rate and lessee's incremental borrowing rate 12%$ 2,450,000Economic life of lithotripterFair value of assetRequired:1. How should this lease be classified by Mid-South Urologists Group and by Physicians' Leasing?2. Prepare appropriate entries for both Mid-South Urologists Group and Physicians' Leasing from the beginning of the leasethrough the second rental payment on April 1, 2024. Adjusting entries are recorded at the end of each fiscal year (December 31).3. Assume Mid-South Urologists Group leased the lithotripter directly from the manufacturer, Rand Medical, which produced themachine at a cost of $2.1 million. Prepare appropriate entries for Rand Medical from the beginning of the lease through thesecond lease payment on April 1, 2024.Complete this question by entering your answers in the tabs below.Required 1Required 2LesseeRequired 2LessorRequired 3How should this lease be classified by Mid-South Urologists Group and by Physicians' Leasing?

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Rand Medical manufactures lithotripters. Lithotripsy uses shock waves instead of surgery to eliminate kidney stones. Physicians' Leasing purchased a lithotripter from Rand for $2,450,000 and leased it to Mid-South Urologists Group, Incorporated, on January 1, 2024. Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. FVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Lease Description: Quarterly lease payments Lease term $ 159,882-beginning of each period 5 years (20 quarters) 5 years Implicit interest rate and lessee's incremental borrowing rate 12% $ 2,450,000 No residual value; no purchase option Economic life of lithotripter Fair value of asset Required:

Rand Medical manufactures lithotripters. Lithotripsy uses shock waves instead of surgery to eliminate kidney stones. Physicians' Leasing purchased a lithotripter from Rand for $2,450,000 and leased it to Mid-South Urologists Group, Incorporated, on January 1, 2024. Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. FVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Lease Description: Quarterly lease payments Lease term $ 159,882-beginning of each period 5 years (20 quarters) 5 years Implicit interest rate and lessee's incremental borrowing rate 12% $ 2,450,000 No residual value; no purchase option Economic life of lithotripter Fair value of asset Required:

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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Rand Medical manufactures lithotripters. Lithotripsy uses shock waves instead of surgery to eliminate kidney stones. Physicians Leasing purchased a lithotripter from Rand for $1,720,000 and leased it to Mid-South Urologists Group, Inc., January 1, 2021. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1, and PVAD of $1) Lease Description: Quarterly lease payments $103,127-beginning of each period. Lease term 5 years (20 quarters) No residual value; no purchase option Economic life of lithotripter 5 years Implicit interest rate and lessee’s incremental borrowing rate 8% Fair value of asset…
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Rand Medical manufactures lithotripters. Lithotripsy uses shock waves instead of surgery to eliminate kidney stones. Physicians' Leasing purchased a lithotripter from Rand for $2,090,000 and leased it to Mid-South Urologists Group, Incorporated, on January 1, 2024. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Lease Description: Quarterly lease payments Lease term No residual value; no purchase option Economic life of lithotripter Implicit interest rate and lessee's incremental borrowing rate Fair value of asset Required: 1. How should this lease be classified by Mid-South Urologists Group and by Physicians' Leasing? 2. Prepare appropriate entries for both Mid-South Urologists Group and Physicians' Leasing from the beginning of the lease through the second rental payment on April 1, 2024. Adjusting entries are recorded at the end of each fiscal year (December 31). 3. Assume Mid-South Urologists Group leased the…