The classification of lease for lessee. Given information: Lease term is 10 years. Economic life of asset is 15 years. Fair value of the asset is $568,548. Cost of asset is $500,000. Implicit interest rate is 5% Annual lease payments are $70,000 due on Jan/1 each year Initial direct cost to lessee is $7,452.

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Answer 1

Question

Chapter 18, Problem 18.13E

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

b.

To determine

To prepare: The amortization tables for the first three years of the lease.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

c.

To determine

To prepare: The journal entries for the lessee for the first year.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

d.

To determine

To prepare: The journal entries for the lessee for the first year in case the lease is operating lease.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

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Exercise 3-12A (Algo) Conducting sensitivity analysis using a spreadsheet LO 3-5 Use the below table to answer the following questions. Selling Price$27.00 Variable 2,100 3,100 Fixed Cost Cost Sales Volume 4,100 Profitability 5,100 6,100 $25,700 8 $14,200 $33,200 $52,200 $71,200 $90,200 25,700 9 12,100 30,100 48,100 66,100 84,100 25,700 10 10,000 27,000 44,000 61,000 78,000 35,700 8 4,200 23,200 42,200 61,200 80,200 35,700 9 2,100 20,100 38,100 56,100 74,100 35,700 10 17,000 34,000 51,000 68,000 45,700 8 (5,800) 13,200 32,200 51,200 70,200 45,700 9 (7,900) 10,100 28,100 46,100 64,100 45,700 10 (10,000) 7,000 24,000 41,000 58,000 Required a. Determine the sales volume, fixed cost, and variable cost per unit at the break-even point. b. Determine the expected profit if Rundle projects the following data for Delatine: sales, 4,100 bottles; fixed cost, $25,700; and variable cost per unit, $10. c. Rundle is considering new circumstances that would change the conditions described in…

Answer 2

Question

Chapter 18, Problem 18.13E

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

b.

To determine

To prepare: The amortization tables for the first three years of the lease.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

c.

To determine

To prepare: The journal entries for the lessee for the first year.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

d.

To determine

To prepare: The journal entries for the lessee for the first year in case the lease is operating lease.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

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Answer 3

Question

Chapter 18, Problem 18.13E

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

b.

To determine

To prepare: The amortization tables for the first three years of the lease.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

c.

To determine

To prepare: The journal entries for the lessee for the first year.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

d.

To determine

To prepare: The journal entries for the lessee for the first year in case the lease is operating lease.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

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Answer 4

Question

Chapter 18, Problem 18.13E

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

b.

To determine

To prepare: The amortization tables for the first three years of the lease.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

c.

To determine

To prepare: The journal entries for the lessee for the first year.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

d.

To determine

To prepare: The journal entries for the lessee for the first year in case the lease is operating lease.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

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Answer 5

Chapter 18, Problem 18.13E

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

b.

To determine

To prepare: The amortization tables for the first three years of the lease.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

c.

To determine

To prepare: The journal entries for the lessee for the first year.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

d.

To determine

To prepare: The journal entries for the lessee for the first year in case the lease is operating lease.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

Answer 6

Chapter 18, Problem 18.13E

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

Answer 7

Chapter 18, Problem 18.13E

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

Answer 8

b.

To determine

To prepare: The amortization tables for the first three years of the lease.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

Answer 9

b.

To determine

To prepare: The amortization tables for the first three years of the lease.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

Answer 10

c.

To determine

To prepare: The journal entries for the lessee for the first year.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

Answer 11

c.

To determine

To prepare: The journal entries for the lessee for the first year.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

Answer 12

d.

To determine

To prepare: The journal entries for the lessee for the first year in case the lease is operating lease.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

Answer 13

d.

To determine

To prepare: The journal entries for the lessee for the first year in case the lease is operating lease.

Given information:

Lease term is 10 years.

Economic life of asset is 15 years.

Fair value of the asset is $568,548.

Cost of asset is $500,000.

Implicit interest rate is 5%

Annual lease payments are $70,000 due on Jan/1 each year

Initial direct cost to lessee is $7,452.

Answer 14

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Answer 15

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Answer 16

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Answer 17

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...

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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