The classification of lease for lessee. Given information: Lease term is 7 years. Economic life of equipment is 10 years. Fair value of the asset is $300,000. Implicit interest rate is 5% Annual lease payments are $45,500 due on Jan/1 each year First payment as on 1/7/Y1

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Answer 1

Question

Chapter 18, Problem 18.12E

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $300,000.

Implicit interest rate is 5%

Annual lease payments are $45,500 due on Jan/1 each year

First payment as on 1/7/Y1

b.

To determine

To prepare: The journal entries for the lessee for year one and two.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $300,000.

Implicit interest rate is 5%

Annual lease payments are $45,500 due on Jan/1 each year

First payment as on 1/7/Y1

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Answer 2

Question

Chapter 18, Problem 18.12E

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $300,000.

Implicit interest rate is 5%

Annual lease payments are $45,500 due on Jan/1 each year

First payment as on 1/7/Y1

b.

To determine

To prepare: The journal entries for the lessee for year one and two.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $300,000.

Implicit interest rate is 5%

Annual lease payments are $45,500 due on Jan/1 each year

First payment as on 1/7/Y1

Expert Solution & Answer

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Answer 3

Question

Chapter 18, Problem 18.12E

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $300,000.

Implicit interest rate is 5%

Annual lease payments are $45,500 due on Jan/1 each year

First payment as on 1/7/Y1

b.

To determine

To prepare: The journal entries for the lessee for year one and two.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $300,000.

Implicit interest rate is 5%

Annual lease payments are $45,500 due on Jan/1 each year

First payment as on 1/7/Y1

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 18, Problem 18.12E

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $300,000.

Implicit interest rate is 5%

Annual lease payments are $45,500 due on Jan/1 each year

First payment as on 1/7/Y1

b.

To determine

To prepare: The journal entries for the lessee for year one and two.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $300,000.

Implicit interest rate is 5%

Annual lease payments are $45,500 due on Jan/1 each year

First payment as on 1/7/Y1

Expert Solution & Answer

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Answer 5

Chapter 18, Problem 18.12E

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $300,000.

Implicit interest rate is 5%

Annual lease payments are $45,500 due on Jan/1 each year

First payment as on 1/7/Y1

b.

To determine

To prepare: The journal entries for the lessee for year one and two.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $300,000.

Implicit interest rate is 5%

Annual lease payments are $45,500 due on Jan/1 each year

First payment as on 1/7/Y1

Answer 6

Chapter 18, Problem 18.12E

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $300,000.

Implicit interest rate is 5%

Annual lease payments are $45,500 due on Jan/1 each year

First payment as on 1/7/Y1

Answer 7

Chapter 18, Problem 18.12E

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $300,000.

Implicit interest rate is 5%

Annual lease payments are $45,500 due on Jan/1 each year

First payment as on 1/7/Y1

Answer 8

b.

To determine

To prepare: The journal entries for the lessee for year one and two.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $300,000.

Implicit interest rate is 5%

Annual lease payments are $45,500 due on Jan/1 each year

First payment as on 1/7/Y1

Answer 9

b.

To determine

To prepare: The journal entries for the lessee for year one and two.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $300,000.

Implicit interest rate is 5%

Annual lease payments are $45,500 due on Jan/1 each year

First payment as on 1/7/Y1

Answer 10

Expert Solution & Answer

Answer 11

Expert Solution & Answer

Answer 12

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Answer 13

Ch. 18 - Does the lessee become the owner of the equipment...Ch. 18 - Prob. 18.2Q Ch. 18 - Prob. 18.3Q Ch. 18 - What are typical terms and provisions in a lease...Ch. 18 - How does a lease offer business and financial...Ch. 18 - Prob. 18.6Q Ch. 18 - How is the right-of-use asset measured?Ch. 18 - What components are included in a lease contract?Ch. 18 - How does a lessee separate lease and nonlease...Ch. 18 - How does a lessor separate lease and nonlease...

The classification of lease for lessee. Given information: Lease term is 7 years. Economic life of equipment is 10 years. Fair value of the asset is $300,000. Implicit interest rate is 5% Annual lease payments are $45,500 due on Jan/1 each year First payment as on 1/7/Y1

Solution Summary: The author explains that lease is a long-term rent agreement between two parties that is often clubbed with other clauses relating to maintenance or sale at the end of the lease period.

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The classification of lease for lessee.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $300,000.

Implicit interest rate is 5%

Annual lease payments are $45,500 due on Jan/1 each year

First payment as on 1/7/Y1

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Chapter 18 Solutions