Sheridan Company enters into a lease agreement with Sunland Inc. to lease office space for a term of 72 months. Lease payments during the first year are $6,800 per month. Each year thereafter, the lease payments increase by an amount equivalent to the percentage increase in the Consumer Price Index (CPI). For example, if the CPI increases 2% in the second year, the monthly payment increases to $6,936. In the second year, the CPI increases by 3%. What are the lease payment amounts used to record this lease in the second year? Lease payment +A $ 84,048

Sheridan Company enters into a lease agreement with Sunland Inc. to lease office space for a term of 72 months. Lease payments during the first year are $6,800 per month. Each year thereafter, the lease payments increase by an amount equivalent to the percentage increase in the Consumer Price Index (CPI). For example, if the CPI increases 2% in the second year, the monthly payment increases to $6,936. In the second year, the CPI increases by 3%. What are the lease payment amounts used to record this lease in the second year? Lease payment +A $ 84,048

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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On 1 January 20X1, Dynamic entered into a three year lease for a lorry. Lease payments are $10,000 per year for the first two years and $15,000 for the third year. All payments are due at the end of the year. The present value of the lease payments was $31,552, and Dynamic incurred initial direct costs of $3,000. Dynamic's rate of borrowing is 5%. Prepare extracts from Dynamic's financial statements in respect of the lease agreement for the year ended 31 December 20X1.
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On January 1 of Year 1, Yogart Inc. signed a 10-year lease for its retail outlet. The lease payments, paid semiannually each January 1 and July 1, are based upon semiannual sales and equal 5% of sales with a semiannual sales minimum of $2,500,000. Based on the previous three years, average sales per semiannual period are $3,000,000. Yogart's incremental borrowing rate is 6% and it is unaware of the rate implicit in the lease. The lease is classified as an operating lease by Yogart. The first semiannual payment of $125,000, calculated as 5% of $2,500,000, is due immediately on January 1 of Year 1. Yogart's accounting year ends June 30. Required a. Calculate the lease liability recorded by Yogart Inc. on January 1 of Year 1. • Note: Round your answers to the nearest whole dollar. Lease liability: $ 2,371,198 x b. Calculate the right-of-use asset recorded by Yogart Inc. on January 1 of Year 1. Right-of-Use Asset: $0. Lease Liability Schedule Date Jan. 1, Year 1 Jan. 1, Year 1 $ July 1,…
York Construction agreed to lease payments of $762.79 on construction equipment to be made at the end of each month for six years. Financing is at 15% p.a. compounded monthly. a. If the lease were paid off after ten months, what would the total interest be? b. How much of the total interest would be due to deferring the first nine payments?
Denger
The lease requires equal rental payments of $30,580 at the beginning of each year of the term. The PV of the lease payments is $177,030. The company pays all executory costs directly to third parties. The appropriate interest rate is 10.57%. Assume IFRS 16 applies. Both the lessor and lessee have December 31 year ends. How much total revenue will be recorded by the lessor in its books in Year 1 in relation to this lease assuming (1) the fair value of the equipment equals the PV of the lease payments and (2) the lessor is an equipment vendor? If applicable, include interest, sales, and rent in the revenue calculation. $187,697 $192,510 $197,323 $202,135 $206,948
Yankee Construction agreed to lease payments of $762.79 on construction equipment to be made at the end of each month for six years. Financing is at 15% compounded monthly. a) What is the value of the original lease contract? b) If, due to delays, the first eight payments were deferred, how much money would be needed after nine months to bring the lease payments up to date? c) How much money would be required to pay off the lease after nine months?
Apolonia Place is an office building that has recently been put up for sale. It is rented by one tenantwho has ten years remaining on their lease. The rent for years 1-3 has been fixed at ¢300,000 perannum, the rent for years 4-6 is fixed at ¢420,000 per annum and the rent for years 7-10 has beenfixed at ¢510,000 per annum. The rent is payable annually and in arrears. When the lease ends, itis forecast that the property will sell for ¢2 million. The property is currently being advertised for¢2.7 million and the landlord has already paid an advertisement cost of ¢500,000. The risk oninvestment of this kind is currently 12%.(a) Calculate the payback of the investment and comment on your results.(b) Calculate the NPV of the investment and comment on your results.(c) Calculate the IRR of the investment and comment on your results.(d) Your client, Mr. Yeboah, has approached you that he wants to purchase Apolonia Place andanticipates that he can use 5 years to recoup his investment. Prior to…
Wilson Foods Corporation leased a commercial food processor on September 30, 2021. The five-year finance lease agreement calls for Wilson to make quarterly lease payments of $313,238, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2021. Wilson’s incremental borrowing rate is 12%. Wilson records amortization on a straight-line basis at the end of each fiscal year. Wilson recorded the lease as follows: September 30, 2021 Right-of-use asset (calculated below) 4,800,000 Lease payable (calculated below) 4,800,000 Lease payable 313,238 Cash (first payment) 313,238 Calculation of the present value of lease payments$313,238 × 15.3238* = $4,800,000 (rounded)*Present value of an annuity due of $1: n = 20, i = 3% Required:What would be the pretax amounts related to the lease that Wilson would report in its statement of cash flows for the year ended December 31, 2021?
On January 1, Lessor Company signed a 1-year rental with quarterly payments of P100,000 due at the end of each quarter. In addition, the lessee must pay contingent rent of 5% of all sales in excess of P10,000,000. The contingent rent is paid in one payment on December 31. The same lessee has used the building for the past 5 years, and in each of those years the lessee reached the contingent rent threshold of P10,000,000 in sales. Sales of the lessee for the first two quarters are as follows: Quarter ended Amount March 31 P3,200,000 June 30 3,000,000 What amount of rent income should be reflected in Lessor's quarterly income statement for the three months ended June 30?
A construction company agreed to lease payments of $573.95 on construction equipment to be made at the end of every month for 5 years. Financing is at 7% compounded monthly. (a) What is the value of the original lease contract? (b) If, due to delays, the first 9 payments were deferred, how much money would be needed after 10 payments to bring the lease payments up to date? (c) How much money would be required to pay off the lease after 10 payments? (d) If the lease were paid off after 10 payments, what would the total interest be? (e) How much of the total interest would be due to deferring the first 9 payments? C... (a) The value of the original lease contract is $. (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (b) The company would have to pay $. (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (c) The company would need $. (Round the final…
On January 1, Lessee Company leases equipment with a useful life of 5 years for a 6-year lease term. Payments of $88,000 are due at the beginning of each year. The incremental borrowing rate is 4%. The present value of the payments is $407,440. Which of the following is true? Interest expense at the end of the first year is $407,440 x .04 Amortization expense at the end of the first year is $407,440 divided by 6. Lease expense at the end of the first year is $88,000. Interest expense at the end of the first year is $319,440 x .04

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