Required informationABC Corp. manufactured equipment and then leased the equipment to XYZ Corp. on January 1, 2021. Additional details:Annual paymentsLease termUseful life of assetImplicit interest ratePresent value of lease paymentsLease classification$30,00012 years16 years8.0%$244,169Finance leaseThe first payment occurs on January 1, 2021, and at each December 31 thereafter. The lease does not transfer ownershipat lease-end, and there is no bargain purchase option. (Round final answers to the nearest whole dollar.)Use the information above to answer the questions below.What is the balance of the lease after the first lease payment?Balance of lease after first payment:

Annual Payments : $30,000. Lease Terms: 12 years Implicit Interest rate : 8% Present Value :…

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Business

Accounting

What is the balance of the lease after the first lease payment?

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

Required information
ABC Corp. manufactured equipment and then leased the equipment to XYZ Corp. on January 1, 2021. Additional details:
Annual payments
Lease term
Useful life of asset
Implicit interest rate
Present value of lease payments
Lease classification
$30,000
12 years
16 years
8.0%
$244,169
Finance lease
The first payment occurs on January 1, 2021, and at each December 31 thereafter. The lease does not transfer ownership
at lease-end, and there is no bargain purchase option. (Round final answers to the nearest whole dollar.)
Use the information above to answer the questions below.
What is the balance of the lease after the first lease payment?
Balance of lease after first payment:

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