Larkspur Leasing Company signs an agreement on January 1, 2020, to lease equipment to Cole Company. The following information relates to this agreement. Please answer part (b) in the image shown and fill in the entries for 12/31/25 as everything else is done already. Please fill in the remaining boxes shown. Thank you! 1. The term of the non-cancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6 years. 2. The cost of the asset to the lessor is $401,000. The fair value of the asset at January 1, 2020, is $401,000. 3. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $22,050, none of which is guaranteed.
Larkspur Leasing Company signs an agreement on January 1, 2020, to lease equipment to Cole Company. The following information relates to this agreement. Please answer part (b) in the image shown and fill in the entries for 12/31/25 as everything else is done already. Please fill in the remaining boxes shown. Thank you! 1. The term of the non-cancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6 years. 2. The cost of the asset to the lessor is $401,000. The fair value of the asset at January 1, 2020, is $401,000. 3. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $22,050, none of which is guaranteed.
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 15PROB
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Larkspur Leasing Company signs an agreement on January 1, 2020, to lease equipment to Cole Company. The following information relates to this agreement. Please answer part (b) in the image shown and fill in the entries for 12/31/25 as everything else is done already. Please fill in the remaining boxes shown. Thank you!
1. | The term of the non-cancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6 years. | |
2. | The cost of the asset to the lessor is $401,000. The fair value of the asset at January 1, 2020, is $401,000. | |
3. | The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $22,050, none of which is guaranteed. | |
4. | The agreement requires equal annual rental payments, beginning on January 1, 2020. | |
5. | Collectibility of the lease payments by Larkspur is probable. |
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