a. Dwayne Wade Company recently signed a lease for a new office building, for a lease period of 10 years. Under the lease agreement, a security deposit of $12,000 is made, with the deposit to be returned at the expiration of the lease, with interest compounded at 5% per year. What amount will the company receive at the time the lease expires?
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Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
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- P21-15 (Please use the latest IFRS accounting standards to answer the question, and take note that lessee do recognise depreciation) Cleveland Group leased a new crane to Abriendo Construction under a 5-year, non-cancelable contract starting January 1, 2022. Terms of the lease require payments of R$48,555 each January 1, starting January 1, 2022. The crane has an estimated life of 7 years, a fair value of R$240,000, and a cost to Cleveland of R$240,000. The estimated fair value of the crane is expected to be R$45,000 (unguaranteed) at the end of the lease term. No bargain purchase or renewal options are included in the contract, and the crane is not a specialized asset. Both Cleveland and Abriendo adjust and close books annually at December 31. Collectibility of the lease payments is probable. Abriendo's incremental borrowing rate is 8%, and Cleveland's implicit interest rate of 8% is known to Abriendo. Instructions a. Identify the type of lease involved and give reasons for your…On January 1, 2022, Yencay, Inc. signs a 10-year noncancelable lease agreement to lease a storage building from Thol Warehouse Company. Collectibility of lease payments is reasonably predictable and no important uncertainties surround the amount of costs yet to be incurred by the lessor. The following information pertains to this lease agreement. The fair value of the building on January 1, 2022 is P4,000,000; however, the book value to Holt is P3,300,000. The building has an estimated economic life of 10 years, with no residual value. Yencay depreciates similar buildings on the straight-line method. At the termination of the lease, the title to the building will be transferred to the lessee. Yencay's incremental borrowing rate is 11% per year. Thol Warehouse Co. set the annual rental to insure a 10% rate of return. The implicit rate of the lessor is known by Yencay, Inc. The yearly rental payment includes P10,000 of executory costs related to taxes on the property. The agreement…On January 1, 2022, Yencay, Inc. signs a 10-year noncancelable lease agreement to lease a storage building from Thol Warehouse Company. Collectibility of lease payments is reasonably predictable and no important uncertainties surround the amount of costs yet to be incurred by the lessor. The following information pertains to this lease agreement. The fair value of the building on January 1, 2022 is P4,000,000; however, the book value to Holt is P3,300,000. The building has an estimated economic life of 10 years, with no residual value. Yencay depreciates similar buildings on the straight-line method. At the termination of the lease, the title to the building will be transferred to the lessee. Yencay's incremental borrowing rate is 11% per year. Thol Warehouse Co. set the annual rental to insure a 10% rate of return. The implicit rate of the lessor is known by Yencay, Inc. The yearly rental payment includes P10,000 of executory costs related to taxes on the property. The agreement…
- At the beginning of the current year, a company leased computer equipment to another company under a direct financing lease.The equipment has no residual value at the end of the lease and the lease does not contain bargain purchase option.The entity wishes to earn 8% interest on a 5-year lease of equipment with a cost of P3,234,000. The present value of an annuity due of 1 at 8% for 5 years is 4.312.What is the interest revenue for the current year?Vaughn Company recently signed a lease for a new office building, for a lease period of 11 years. Under the lease agreement, a security deposit of $13,930 is made, with the deposit to be returned at the expiration of the lease, with interest compounded at 5% per year.What amount will the company receive at the time the lease expires? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)Please solve. ASAP. Thank you. On January 1, 20x1, Chirp Co. entered into a 4-year lease agreement with Birds, Inc. for a piece of industrial equipment. Lease payment is P100,000, payable annually starting on January 1, 20x1. Chirp Co. knows that the lessor expects a 10% return on the lease. Chirp Co. has a 12% incremental borrowing rate. The equipment has an estimated useful life of 5 years and a residual value of P25,000. The lease agreement contained a purchase option that is exercisable at the end of the lease term for P50,000. It is reasonably certain that ChirpO Co. will exercise the purchase option. Chirp Co. uses the straight line method of depreciation. Requirements: 1. Provide the journal entries on Jan. 1, 20x1, Dec. 31, 20x1 and 2. Jan. 1, 20x2. 2. Prepare Chirp Co.'s Dec. 31, 20x1 partial statement of financial position and partial statement of comprehensive income. Indicate current and noncurrent assets and liabilities.
- 2. On January 2, 20x6, Ashe Company entered into a ten-year non-cancelable lease requiring year-end payments of P100,000. Ashe’s incremental borrowing rate is 12% while the lessor’s implicit interest rate, known to Ashe, is 10%. Ownership of the property remains with the lessor at the expiration of the lease. There is no bargain purchase option. The leased property has an estimated economic life of 12 years. What amount should Ashe capitalize for this leased property on January 2, 20x6?7...e1 Sage Industries and Pronghorn Inc. enter into an agreement that requires Pronghorn Inc. to build three diesel-electric engines to Sage’s specifications. Upon completion of the engines, Sage has agreed to lease them for a period of 10 years and to assume all costs and risks of ownership. The lease is non-cancelable, becomes effective on January 1, 2020, and requires annual rental payments of $405,443 each January 1, starting January 1, 2020.Sage’s incremental borrowing rate is 8%. The implicit interest rate used by Pronghorn and known to Sage is 7%. The total cost of building the three engines is $2,685,000. The economic life of the engines is estimated to be 10 years, with residual value set at zero. Sage depreciates similar equipment on a straight-line basis. At the end of the lease, Sage assumes title to the engines. Collectibility of the lease payments is probable.Click here to view factor tables. (a) Your answer has been saved. See score details after…On March 31, 20x1, TRUST CO. (customer)enters into a 4 -year lease of equipment with FAITH CO. ( Supplier). The annual rent is P220,000, payable at the end of each year . The equipment has a remaining useful life of 10 years. The interest rate implicit in the lease is 10% while the lessee's incremental borrowing rate is 12%. The relevant value factors are as follows: PV of an ordinary annuity of P1@10%, n=4 ...... 3.16987 PV of an ordinary annuity of P1@12%, n=4 ....... 3.03735 How much is the lease liability to be recognized by TRUST CO. on initial recognition? A. P880,000 B. P697,371 C. P523,029 D. P702,345
- On March 31, 20x1, TRUST CO. (customer)enters into a 4 -year lease of equipment with FAITH CO. ( Supplier). The annual rent is P220,000, payable at the end of each year . The equipment has a remaining useful life of 10 years. The interest rate implicit in the lease is 10% while the lessee's incremental borrowing rate is 12%. The relevant value factors are as follows: PV of an ordinary annuity of P1@10%, n=4 ...... 3.16987 PV of an ordinary annuity of P1@12%, n=4 ....... 3.03735 1.How much is the lease liability to be recognized by TRUST CO. on initial recognition? 2.Assume that the lease in No. 2 is a A)finance lease. How much is the net investment in the lease to be recognized by FAITH CO. on initial recognition? B) Assume that the lease is an operating lease . How much is the lease ( rent) income in 20x2?Assume that on January 1, 2020, Elmer's Restaurants sells a computer system to Liquidity Finance Co. for $680,000 and immediately leases back the computer system. The relevant information is as follows. 1. The computer was carried on Elmer's books at a value of $600,000. 2. The term of the non-cancelable lease is 3 years; title will not transfer to Elmer's, and the expected residual value at the end of the lease is $450,000, all of which is unguaranteed. 3. The lease agreement requires equal rental payments of $115,970 at the beginning of each year. 4. The incremental borrowing rate for Elmer's is 8%. Elmer's is aware that Liquidity Finance set the annual rental to ensure a rate of return of 8%. 5. The computer has a fair value of $680,000 on January 1, 2020, and an estimated economic life of 10 years. Instructions Prepare the journal entries for both the lessee and the lessor for 2020 to reflect the sale and leaseback agreement.On 01/01/2016,Helen Company entered into a non-cancelable lease contract, with Slig Corp. for an equipment that has an estimated useful life of 10 years and fair market value to the lessor,Slig Corp. of $2,800,000. The lease was appropriately classified as a finance lease by both parties. Helen's incremental borrowing rate is 12%. Slig Corp’s required Return on Investment (ROI) is 10%. Both Helen and Slig use the straight-line method to depreciate Property, Plant and Equipment assets. The lease contains the following provisions: 1. The lessor required the lessee to make equal rental payments at the beginning of each period of the contract term. 2. The lease term is for 8 years with a 2-years renewal option. 3. The contract includes a termination penalty that makes it certain that there will be a renewal of the lease for a period of 2 years after expiration of the initial lease term. 4. The residual value is expected to be $60,000. The lessee guarantees this residual value by the end of…