Delaney Company leases an automobile with a fair value of $10,000 from Simon Motors, Inc., on the following terms.1.2.Rental of $200 per month (at the beginning of each month). (The present value at 0.5% per month is $8,873.)Delaney guarantees a residual value of $1,180 (the present value at 0.5% per month is $920). Delaney expects the probableresidual value to be $1,180 at the end of the lease term.Estimated economic life of the automobile is 60 months.5. Delaney's incremental borrowing rate is 6% a year (0.5% a month). Simon's implicit rate is unknown.3.4.Non-cancelable term of 50 months.Click here to view factor tables.(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)(a)(b)X Your answer is incorrect.What is the present value of the lease payments to determine the lease liability? (Round answer to O decimal places, e.g. 5,275.)Present value of the lease payments$2860200

Lease is an agreement whereby the lessor gives lessee the right to use a particular asset and in…

Delaney Company leases an automobile with a fair value of $10,000 from Simon Motors, Inc., on the following terms. 1. 2. 3. 4. 5. Non-cancelable term of 50 months. Rental of $200 per month (at the beginning of each month). (The present value at 0.5% per month is $8,873.) Delaney guarantees a residual value of $1,180 (the present value at 0.5% per month is $920). Delaney expects the probable residual value to be $1,180 at the end of the lease term. Estimated economic life of the automobile is 60 months. Delaney's incremental borrowing rate is 6% a year (0.5% a month). Simon's implicit rate is unknown.

Delaney Company leases an automobile with a fair value of $10,000 from Simon Motors, Inc., on the following terms. 1. 2. 3. 4. 5. Non-cancelable term of 50 months. Rental of $200 per month (at the beginning of each month). (The present value at 0.5% per month is $8,873.) Delaney guarantees a residual value of $1,180 (the present value at 0.5% per month is $920). Delaney expects the probable residual value to be $1,180 at the end of the lease term. Estimated economic life of the automobile is 60 months. Delaney's incremental borrowing rate is 6% a year (0.5% a month). Simon's implicit rate is unknown.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 10MC: On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring...

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