a.
The implicit rate of the lease.
Given information:
Lease term is 4 years.
Economic life of equipment is 10 years.
There is no purchase option in the lease.
There is no transfer of title clause in the lease.
Estimated unguaranteed residual value is $1,200.
Fair value of the asset is $18,000.
Carrying value of asset is $15,500.
Annual lease payments are $4,500.
b.
The classification of lease.
Given information:
Lease term is 4 years.
Economic life of equipment is 10 years.
There is no purchase option in the lease.
There is no transfer of title clause in the lease.
Estimated unguaranteed residual value is $1,200.
Fair value of the asset is $18,000.
Carrying value of asset is $15,500.
Annual lease payments are $4,500.
c.
To prepare: The
Given information:
Lease term is 4 years.
Economic life of the equipment is 10 years.
There is no purchase option in the lease.
There is no transfer of title clause in the lease.
Estimated unguaranteed residual value is $1,200.
Fair value of the asset is $18,000.
Carrying value of the asset is $15,500.
Annual lease payments are $4,500.

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Chapter 18 Solutions
Intermediate Accounting
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