Zhang Company leased equipment from Mann Industries. The lease agreement qualifies as a finance lease and requires annual leasepayments of $53,750 over a five-year lease term (also the asset's useful life), with the first payment on January 1, the beginning of thelease. The interest rate is 6%. The asset being leased cost Mann $190,000 to produce.Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)Required:1. Determine the price at which the lessor is "selling" the asset (present value of the lease payments).2. What would be the amounts related to the lease that the lessor would report in its income statement for the year endedDecember 31 (ignore taxes)?Required 1 Required 2Determine the price at which the lessor is "selling" the asset (present value of the lease payments).Note: Round your intermediate and final answers to the nearest whole dollar.PV factors based onTable or Calculator function:Lease PaymentPV of Lease PaymentsRequired 1Required 2n=i=Sales revenueCost of goods soldInterest revenuePVAD of $1SWhat would be the amounts related to the lease that the lessor would report in its income statement for the year endedDecember 31 (ignore taxes)?Note: Input decreases to income as negative amounts. Round your intermediate and final answers to the nearest whole dollar.Income statement effect53,75056.0%S 226,973 XIncome StatementFor the year ended December 31(190,000)$ (190,000)

This type of lease involves transfer of all substantial benefits and risks attached to the property…

Zhang Company leased equipment from Mann Industries. The lease agreement qualifies as a finance lease and requires annual lease payments of $53,750 over a five-year lease term (also the asset's useful life), with the first payment on January 1, the beginning of the lease. The interest rate is 6%. The asset being leased cost Mann $190,000 to produce. Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) Required: 1. Determine the price at which the lessor is "selling" the asset (present value of the lease payments). 2. What would be the amounts related to the lease that the lessor would report in its income statement for the year ended December 31 (ignore taxes)?

Zhang Company leased equipment from Mann Industries. The lease agreement qualifies as a finance lease and requires annual lease payments of $53,750 over a five-year lease term (also the asset's useful life), with the first payment on January 1, the beginning of the lease. The interest rate is 6%. The asset being leased cost Mann $190,000 to produce. Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) Required: 1. Determine the price at which the lessor is "selling" the asset (present value of the lease payments). 2. What would be the amounts related to the lease that the lessor would report in its income statement for the year ended December 31 (ignore taxes)?

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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