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Tease, ΟΛΟ nual lease payments are $10,000 due each Decer he last payment is due 12/31/20X5. Both the less rest rate. The remaining useful life of the asset v

Tease, ΟΛΟ nual lease payments are $10,000 due each Decer he last payment is due 12/31/20X5. Both the less rest rate. The remaining useful life of the asset v

FINANCIAL ACCOUNTING
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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a.

Choice 1

b.

Choice 5

c.

Choice 3

d.

Choice 4

e.

Choice 2

The inception of a lease is 1/1/20X1. A third party guarantees the residual value of the asset under the lease, estimated to be $12,000 at 1/1/20X6, the end of the lease term. Annual lease payments are $10,000 due each December 31 beginning 12/31/20X1. The last payment is due 12/31/20X5. Both the lessor and lessee use 10% as the interest rate. The remaining useful life of the asset was 6 years at inception. What is the net asset balance for the lessor and net liability balance for the lessee, at inception (rounded to the nearest dollar)? 1 2 3 4 LO 5 Net asset (lessor) $45,359 $37,908 $45,359 $37,908 $47,119 Net liability (lessee) $45,359 $47,908 $37,908 $45,359 $38,339
Transcribed Image Text:The inception of a lease is 1/1/20X1. A third party guarantees the residual value of the asset under the lease, estimated to be $12,000 at 1/1/20X6, the end of the lease term. Annual lease payments are $10,000 due each December 31 beginning 12/31/20X1. The last payment is due 12/31/20X5. Both the lessor and lessee use 10% as the interest rate. The remaining useful life of the asset was 6 years at inception. What is the net asset balance for the lessor and net liability balance for the lessee, at inception (rounded to the nearest dollar)? 1 2 3 4 LO 5 Net asset (lessor) $45,359 $37,908 $45,359 $37,908 $47,119 Net liability (lessee) $45,359 $47,908 $37,908 $45,359 $38,339
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