Wildhorse Limited has signed a lease agreement with Lantus Corp. to lease equipment with an expected lifespan of eight years, no estimated salvage value, and a cost to Lantus, the lessor of $199,000. The terms of the lease are as follows: ● The lease term begins on January 1, 2019, and runs for 5 years. ● The lease requires payments of $45,359 at the beginning of each year starting January 1, 2019. ● At the end of the lease term, the equipment is to be returned to the lessor. ● Lantus’ implied interest rate is 7%, while Wildhorse’s borrowing rate is 8%. Wildhorse uses straight-line depreciation for similar equipment. The year-end for both companies is December 31. Assume that both companies follow ASPE. (a)Determine the present value of the minimum lease payments Ans 199,000 B.) Prepare Wildhorse’s lease amortization schedule using the effective interest method. (Round answers to 0 decimal places, e.g. 5,275.) Date Payment Interest Principal Balance January 1, 2019 $ 199000 January 1, 2019 $ 45359 $ $ January 1, 2020 45359 January 1, 2021 45359 January 1, 2022 45359 January 1, 2023 45359 $ 226795 $ $ Please help with this question part B show solution in steps for excel w/ formula thank you in advance
Wildhorse Limited has signed a lease agreement with Lantus Corp. to lease equipment with an expected lifespan of eight years, no estimated salvage value, and a cost to Lantus, the lessor of $199,000. The terms of the lease are as follows: ● The lease term begins on January 1, 2019, and runs for 5 years. ● The lease requires payments of $45,359 at the beginning of each year starting January 1, 2019. ● At the end of the lease term, the equipment is to be returned to the lessor. ● Lantus’ implied interest rate is 7%, while Wildhorse’s borrowing rate is 8%. Wildhorse uses straight-line depreciation for similar equipment. The year-end for both companies is December 31. Assume that both companies follow ASPE. (a)Determine the present value of the minimum lease payments Ans 199,000 B.) Prepare Wildhorse’s lease amortization schedule using the effective interest method. (Round answers to 0 decimal places, e.g. 5,275.) Date Payment Interest Principal Balance January 1, 2019 $ 199000 January 1, 2019 $ 45359 $ $ January 1, 2020 45359 January 1, 2021 45359 January 1, 2022 45359 January 1, 2023 45359 $ 226795 $ $ Please help with this question part B show solution in steps for excel w/ formula thank you in advance
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Wildhorse Limited has signed a lease agreement with Lantus Corp. to lease equipment with an expected lifespan of eight years, no estimated salvage value, and a cost to Lantus, the lessor of $199,000. The terms of the lease are as follows:
Assume that both companies follow ASPE.
| ● | The lease term begins on January 1, 2019, and runs for 5 years. | |
| ● | The lease requires payments of $45,359 at the beginning of each year starting January 1, 2019. | |
| ● | At the end of the lease term, the equipment is to be returned to the lessor. | |
| ● | Lantus’ implied interest rate is 7%, while Wildhorse’s borrowing rate is 8%. Wildhorse uses straight-line |
Assume that both companies follow ASPE.
(a)Determine the present value of the minimum lease payments
Ans 199,000
B.) Prepare Wildhorse’s lease amortization schedule using the effective interest method. (Round answers to 0 decimal places, e.g. 5,275.)
| Date | Payment | Interest | Principal | Balance | ||||
| January 1, 2019 | $ 199000 | |||||||
| January 1, 2019 | $ 45359 | $ | $ | |||||
| January 1, 2020 | 45359 | |||||||
| January 1, 2021 | 45359 | |||||||
| January 1, 2022 | 45359 | |||||||
| January 1, 2023 | 45359 | |||||||
| $ 226795 | $ | $ |
Please help with this question part B show solution in steps for excel w/ formula thank you in advance
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