The following facts pertain to a non-cancelable lease agreement between Sandhill Leasing Company and Carla Vista Company, a lessee. Commencement date Annual lease payment due at the beginning of each year, beginning with January 1, 2025 Residual value of equipment at end of lease term, guaranteed by the lessee Expected residual value of equipment at end of lease term Lease term Economic life of leased equipment Fair value of asset at January 1, 2025 Lessor's implicit rate Lessee's incremental borrowing rate Click here to view factor tables. (a) Date 1/1/25 1/1/25 The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipmen 1/1/26 $ Annual Lease Payment Plus GRV Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to O decimal places e.g. 5,275.) 0 110459 January 1, 2025 110459 $110,459 $ $50,000 $45,000 6 years 6 years $626,000 5% 5% CARLA VISTA COMPANY (Lessee) Lease Amortization Schedule Interest on Liability 0 0 $ Reduction of Lease Liability 0 $

The following facts pertain to a non-cancelable lease agreement between Sandhill Leasing Company and Carla Vista Company, a lessee. Commencement date Annual lease payment due at the beginning of each year, beginning with January 1, 2025 Residual value of equipment at end of lease term, guaranteed by the lessee Expected residual value of equipment at end of lease term Lease term Economic life of leased equipment Fair value of asset at January 1, 2025 Lessor's implicit rate Lessee's incremental borrowing rate Click here to view factor tables. (a) Date 1/1/25 1/1/25 The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipmen 1/1/26 $ Annual Lease Payment Plus GRV Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to O decimal places e.g. 5,275.) 0 110459 January 1, 2025 110459 $110,459 $ $50,000 $45,000 6 years 6 years $626,000 5% 5% CARLA VISTA COMPANY (Lessee) Lease Amortization Schedule Interest on Liability 0 0 $ Reduction of Lease Liability 0 $

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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Concept explainers

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

Question

The following facts pertain to a non-cancelable lease agreement between Sandhill Leasing Company and Carla Vista Company, a
lessee.
Commencement date
Annual lease payment due at the beginning of
each year, beginning with January 1, 2025
Residual value of equipment at end of lease term,
guaranteed by the lessee
Expected residual value of equipment at end of lease term
Lease term
Economic life of leased equipment
Fair value of asset at January 1, 2025
Lessor's implicit rate
Lessee's incremental borrowing rate
Click here to view factor tables.
(a)
Date
1/1/25
1/1/25
1/1/26
The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment.
1/1/27
1/1/28
1/1/29
Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round present value factor calculations
to 5 decimal places, e.g. 1.25124 and the final answers to O decimal places e.g. 5,275.)
1/1/30
12/31/30
$
$
Annual Lease
Payment Plus GRV
0
110459
110459
110459
110459
110459
110459
50,000
January 1, 2025
$
$110,459
$
$50,000
$45,000
6 years
6 years
$626,000
5 %
5 %
CARLA VISTA COMPANY (Lessee)
Lease Amortization Schedule
Interest on
Liability
0
0
$
$
Reduction of Lease
Liability
0
$

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A.4.