Reporting a Sales-Type Lease-Lessor On January 1, the first day of its accounting year. Lessor Inc. leased certain equipment at an annual payment of $10.254.19. receivable at the beginning of each year for 10 years. The first payment was received immediately. The equipment has an estimated useful life of 12 years a no residual value. Lessor's implicit rate is 6%. Lessor had no other costs associated with this lease and properly classified the lease as a sales-type lease. The leased equipment was carried on Lessor Inc.'s books at $65,000. Required a. Calculate the value of the lease receivable at the commencement of the lease. • Note: Round answer to the nearest dollar. • Note: Do not use a negative sign with your answer. Lease receivable S ох b. What amounts would be presented in the balance sheet as of December 31 related to this lease? Note: Round answers to the nearest dollar. Balance Sheet Assets Current Assets Initial Direct Cost Noncurrent Assets Inventory Revenue Cost of Goods Sold Interest revenue 0 x c. What amounts would be presented in the income statement for the year ended December 31 related to this lease? Note: Round answers to the nearest dollar. Income Statement Expenses Accrued Legal Expense ÷ 8 Check Dec. 31 # 8 S 0x 0x 0x 4,185 x
Reporting a Sales-Type Lease-Lessor On January 1, the first day of its accounting year. Lessor Inc. leased certain equipment at an annual payment of $10.254.19. receivable at the beginning of each year for 10 years. The first payment was received immediately. The equipment has an estimated useful life of 12 years a no residual value. Lessor's implicit rate is 6%. Lessor had no other costs associated with this lease and properly classified the lease as a sales-type lease. The leased equipment was carried on Lessor Inc.'s books at $65,000. Required a. Calculate the value of the lease receivable at the commencement of the lease. • Note: Round answer to the nearest dollar. • Note: Do not use a negative sign with your answer. Lease receivable S ох b. What amounts would be presented in the balance sheet as of December 31 related to this lease? Note: Round answers to the nearest dollar. Balance Sheet Assets Current Assets Initial Direct Cost Noncurrent Assets Inventory Revenue Cost of Goods Sold Interest revenue 0 x c. What amounts would be presented in the income statement for the year ended December 31 related to this lease? Note: Round answers to the nearest dollar. Income Statement Expenses Accrued Legal Expense ÷ 8 Check Dec. 31 # 8 S 0x 0x 0x 4,185 x
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Reporting a Sales-Type Lease-Lessor
On January 1, the first day of its accounting year, Lessor Inc., leased certain equipment at an annual payment of $10,254.19, receivable at the beginning of each year for 10 years. The first payment was received immediately. The equipment has an estimated useful life of 12 years and
no residual value. Lessor's implicit rate is 6%. Lessor had no other costs associated with this lease and properly classified the lease as a sales-type lease. The leased equipment was carried on Lessor Inc.'s books at $65,000.
Required
a. Calculate the value of the lease receivable at the commencement of the lease.
• Note: Round answer to the nearest dollar.
• Note: Do not use a negative sign with your answer.
Lease receivable $
0 x
b. What amounts would be presented in the balance sheet as of December 31 related to this lease?
Note: Round answers to the nearest dollar.
Balance Sheet
Dec. 31
Assets
Current Assets
Initial Direct Cost
Noncurrent Assets
Inventory
Revenue
+ 8
c. What amounts would be presented in the income statement for the year ended December 31 related to this lease?
Note: Round answers to the nearest dollar.
Income Statement
Cost of Goods Sold
Interest revenue
Expenses
÷ 8
Accrued Legal Expense
Check
0 x
+ 8
$
0x
0 x
0 x
4,185 x
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