10th Edition

ISBN: 9781264046249

Author: SPICELAND

Publisher: MCG

Concept explainers

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

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Textbook Question

Chapter 5, Problem 5.21E

Lease payments; solve for unknown interest rate

• LO6–8, LO6–9

On March 31, 2018, Southwest Gas leased equipment from a supplier and agreed to pay $200,000 annually for 20 years beginning March 31, 2019. Generally accepted accounting principles require that a liability be recorded for this lease agreement for the present value of scheduled payments. Accordingly, at inception of the lease, Southwest recorded a $2,293,984 lease liability.

Required:

Determine the interest rate implicit in the lease agreement.

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Chapter 5, Problem 5.20E

Chapter 5, Problem 5.1P

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Chapter 5 Solutions

INTERMEDIATE ACCOUNTING

Ch. 5 - Prob. 5.1Q Ch. 5 - Explain compound interest.Ch. 5 - Prob. 5.3Q Ch. 5 - Prob. 5.4Q Ch. 5 - Prob. 5.5Q Ch. 5 - Prob. 5.6Q Ch. 5 - What is an annuity?Ch. 5 - Explain the difference between an ordinary annuity...Ch. 5 - Prob. 5.9Q Ch. 5 - Prepare a time diagram for the present value of a...

Ch. 5 - Prepare a time diagram for the present value of a...Ch. 5 - What is a deferred annuity?Ch. 5 - Assume that you borrowed 500 from a friend and...Ch. 5 - Compute the required annual payment in Question...Ch. 5 - Explain how the time value of money concept is...Ch. 5 - Prob. 5.1BE Ch. 5 - Prob. 5.2BE Ch. 5 - Prob. 5.3BE Ch. 5 - Present value; single amount LO63 John has an...Ch. 5 - Present value; solving for unknown; single amount ...Ch. 5 - Future value; ordinary annuity LO66 Leslie...Ch. 5 - Future value; annuity due LO66 Refer to the...Ch. 5 - Prob. 5.8BE Ch. 5 - Prob. 5.9BE Ch. 5 - Prob. 5.10BE Ch. 5 - Solve for unknown; annuity LO68 Kingsley Toyota...Ch. 5 - Price of a bond LO69 On December 31, 2018,...Ch. 5 - Lease payment LO69 On September 30, 2018,...Ch. 5 - Prob. 5.1E Ch. 5 - Future value; single amounts LO62 Determine the...Ch. 5 - Prob. 5.3E Ch. 5 - Prob. 5.5E Ch. 5 - Prob. 5.6E Ch. 5 - Prob. 5.7E Ch. 5 - Prob. 5.10E Ch. 5 - Deferred annuities LO67 Required: Calculate the...Ch. 5 - Solving for unknowns; annuities LO68 For each of...Ch. 5 - Solving for unknown annuity amount LO68 Required:...Ch. 5 - Prob. 5.15E Ch. 5 - Price of a bond LO69 On September 30, 2018, the...Ch. 5 - Price of a bond; interest expense LO69 On June...Ch. 5 - Prob. 5.18E Ch. 5 - Prob. 5.19E Ch. 5 - Lease payments LO69 On June 30, 2018,...Ch. 5 - Lease payments; solve for unknown interest rate ...Ch. 5 - Analysis of alternatives LO63, LO67 Esquire...Ch. 5 - Analysis of alternatives LO63, LO67 Harding...Ch. 5 - Investment analysis LO63, LO67 John Wiggins is...Ch. 5 - Prob. 5.5P Ch. 5 - Prob. 5.6P Ch. 5 - Deferred annuities LO67 On January 1, 2018, the...Ch. 5 - Prob. 5.8P Ch. 5 - Noninterest-bearing note; annuity and lump-sum...Ch. 5 - Prob. 5.10P Ch. 5 - Solving for unknown lease payment LO68, LO69...Ch. 5 - Solving for unknown lease payment; compounding...Ch. 5 - Lease v s. buy alternatives LO63, LO67, LO69...Ch. 5 - Prob. 5.14P Ch. 5 - Prob. 5.15P Ch. 5 - Prob. 5.1DMP Ch. 5 - Prob. 5.2DMP Ch. 5 - Prob. 5.3DMP Ch. 5 - Prob. 5.4DMP Ch. 5 - Judgment Case 65 Replacement decision LO63, LO67...Ch. 5 - Prob. 5.6DMP Ch. 5 - Prob. 5.7DMP

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Solution Summary: The author explains the formula used to calculate the present value of an amount. The lease agreement provides the right to use an asset for a particular period of time to the user.

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Chapter 5 Solutions