Refer to the following lease amortization schedule. The 10 payments are madeannually starting with the beginning of the lease. Title does not transfer to thelessee and there is no purchase option or guaranteed residual value. The assethas an expected economic life of 12 years. The lease is noncancelable.Payment12345678910OCashPaymentMultiple ChoiceO$ 12,00012,00012,00012,00012,00012,00012,00012,00012,000$ 12,000O$8,111$12,000Effective Decrease in OutstandingInterestbalanceBalance$81, 10869,10864,01958,42152,26345,48938,03829,842$ 20,826$6,911$06,9116,4025,8425,2264,5493,804$ 2,984What amount would the lessee record as annual amortization on the right-of-use asset using the straight-line method?Note: Round your answer to the nearest whole dollar.•??$ 12,0005,0895,5986,1586,7747,4518,196$ 9,016????

A lease is a written agreement that indicates the conditions within which a lessor acknowledges to…

Refer to the following lease amortization schedule. The 10 payments are made annually starting with the beginning of the lease. Title does not transfer to the lessee and there is no purchase option or guaranteed residual value. The asset has an expected economic life of 12 years. The lease is noncancelable. Payment 1 2 234 3 5 6 7 8 9 10 Cash Payment $ 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 $ 12,000 Multiple Choice O $8,111 O $12,000 Effective Decrease in Outstanding Interest balance Balance $6,911 $0 6,911 6,402 5,842 5,226 4,549 3,804 $ 2,984 ? ? $ 12,000 5,089 5,598 6,158 6,774 7,451 8,196 $ 9,016 What amount would the lessee record as annual amortization on the right-of- use asset using the straight-line method? Note: Round your answer to the nearest whole dollar. ? ? $ 81,108 69,108 64,019 58,421 52,263 45,489 38,038 29,842 $ 20,826 ? ?

Refer to the following lease amortization schedule. The 10 payments are made annually starting with the beginning of the lease. Title does not transfer to the lessee and there is no purchase option or guaranteed residual value. The asset has an expected economic life of 12 years. The lease is noncancelable. Payment 1 2 234 3 5 6 7 8 9 10 Cash Payment $ 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 $ 12,000 Multiple Choice O $8,111 O $12,000 Effective Decrease in Outstanding Interest balance Balance $6,911 $0 6,911 6,402 5,842 5,226 4,549 3,804 $ 2,984 ? ? $ 12,000 5,089 5,598 6,158 6,774 7,451 8,196 $ 9,016 What amount would the lessee record as annual amortization on the right-of- use asset using the straight-line method? Note: Round your answer to the nearest whole dollar. ? ? $ 81,108 69,108 64,019 58,421 52,263 45,489 38,038 29,842 $ 20,826 ? ?

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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Classifying Leases The following separate scenarios relate to a 5-year lease, pertaining to equipment with a fair value of $50,000. Assume in all scenarios that payments are made at the beginning of the period. 1. Lease payments include a fixed payment of $10,000 per year. 2. Lease payments include a fixed payment of $10,000 per year, plus $500 for insurance and $600 for a maintenance contract. 3. Lease payments will be $10,000 in the first year and will increase by 3% (calculated on the previous year's payment) for each of the following 4 years. 4. Lease payments will be $10,000 in the first year and will increase each of the following years by the increase in the CPI from the preceding year. The current CPI is 120 and is expected to increase to 122 at the end of the next year. 5. Lease payments will be $10,000 in the first year and will increase each of the following years by (a) the increase in the CPI from the preceding year, or (b) 3%, whichever is greater. The current CPI is 120…
Each of the four independent situations below describes a finance lease in which annual lease payments are pay- able at the beginning of each year. The lessee is aware of the lessor's implicit rate of return. Situation Lease term (years) Lessor's rate of return Fair value of lease asset Lessor's cost of lease asset Residual value: Estimated fair value Guaranteed fair value 1 4 10% $50,000 $50,000 0 2 7 11% $350,000 $350,000 $ 50,000 0 3 5 9% $75,000 $45,000 $7,000 $7,000 Required: For each situation, determine: a. The amount of the annual lease payments as calculated by the lessor. b. The amount the lessee would record as a right-of-use asset and a lease liability. 4 8 12% $465,000 $465,000 10 $ 45,000 $ 50,000
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S Terms of a lease agreement and related facts were as follows: a. The lease asset had a retail cash selling price of $100,000. Its useful life was six years with no residual value (straight-line depreciation). b. Annual lease payments at the beginning of each year were $20,873, beginning January 1. c. Lessor's implicit rate when calculating annual rental payments was 10%. d. Costs of $2,062 for legal fees for the lease execution were the responsibility of the lessor. Required: Prepare the appropriate entries for the lessor to record the lease, the initial payment at its beginning, and at the December 31 fiscal year-end under each of the following three independent assumptions: 1. The lease term is three years and the lessor paid $100,000 to acquire the asset (operating lease). 2. The lease term is six years and the lessor paid $100,000 to acquire the asset. Also assume that adjusting the lease receivable (net investment) by initial direct costs reduces the effective rate of interest…
Use the 5 lease criteria to determine if the following lease qualifies as a Capital, Financing lease. The Sirap Co leased equipment from the lessee valued at $400,000. The lease contract has payments of $50,000 per year payable at the end of each year for 12 years. The interest rate is at 8%. The lessor will repossess the equipment at the end of the lease term. The leased equipment does not have a bargain purchase option. The leased equipment has an economic useful life of 16 years. Required: use the 5 criteria, like in illustration 15 - 4 to determine if the lease qualifies as a Capital, financing lease.
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Refer to the following lease amortization schedule. The 10 payments are made annually starting with the beginning of the lease. Title does not transfer to the lessee and there is no purchase option or guaranteed residual value. The asset has an expected economic life of 12 years. The lease is noncancelable. Payment Cash Payment Effective Interest Decrease in balance Outstanding Balance 63,282 1 10,000 10,000 53,282 2 10,000 6,394 3,606 49,676 3 10,000 5,961 4,039 45,637 4 10,000 5,476 4,524 41,113 5 10,000 4,934 5,066 36,047 6 10,000 4,326 5,674 30,373 7 10,000 3,645 6,355 24,018 8 10,000 2,882 7,118 16,900 9 10,000 ? ? ? 10 10,000 ?…