Hello,Need help with attached, thanks Exercise 15-1 (Static) Lease classification [LO15-1]Lease term (years)Asset's useful life (years)Asset's fair value.Purchase option that is reasonablycertain to be exercised?Annual lease paymentsLessor's implicit rate (known by lessee)Lessee's incremental borrowing rateSituation1.2.3.4.146$44,000Lease ClassificationNoBeg. of yr.5%5%24Situation5$45,000YesEnd of yr.6%5%346$41,000NoBeg. of yr.5%5%446$38,000Each of the four independent situations above describes a lease requiring annual lease payments of $10,000. For each situation,determine the appropriate lease classification by the lessee. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Useappropriate factor(s) from the tables provided.)NoEnd of yr.6%5%

Lease is an agreement whereby the lessor conveys to the lessee in return for payment the right to…

Lease term (years) Asset's useful life (years) Asset's fair value Purchase option that is reasonably certain to be exercised? Annual lease payments Lessor's implicit rate (known by lessee) Lessee's incremental borrowing rate 1 4 6 $44,000 No Beg. of yr. 5% 5% Situation 4 5 $45,000 Yes End of yr. 6% 5% 3 4 $41,000 No Beg. of yr. 5% 5% 4 4 6 $38,000 No End of yr. 6% 5% Each of the four independent situations above describes a lease requiring annual lease payments of $10,000. For each situation, determine the appropriate lease classification by the lessee. (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Lease term (years) Asset's useful life (years) Asset's fair value Purchase option that is reasonably certain to be exercised? Annual lease payments Lessor's implicit rate (known by lessee) Lessee's incremental borrowing rate 1 4 6 $44,000 No Beg. of yr. 5% 5% Situation 4 5 $45,000 Yes End of yr. 6% 5% 3 4 $41,000 No Beg. of yr. 5% 5% 4 4 6 $38,000 No End of yr. 6% 5% Each of the four independent situations above describes a lease requiring annual lease payments of $10,000. For each situation, determine the appropriate lease classification by the lessee. (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Exercise 15-9 (Algo) Lessor calculation of annual lease payments; lessee calculation of asset and liability [LO15-2] Each of the three independent situations below describes a finance lease in which annual lease payments are payable at the beginning of each year. The lessee is aware of the lessor's implicit rate of return. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Situation 1 2 3 Lease term (years) 11 21 4 Lessor's rate of return (known by lessee) 10% 8% 11% Lessee's incremental borrowing rate 11% 9% 10% Fair value of lease asset $800,000 $1,180,000 $385,000 Required: a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record as a right-of-use asset and a lease liability, for each of the above situations. Note: Round your answers to the nearest whole dollar.
MN.17. On 1 July 2020 Jane Ltd (lessor) leased equipment to Austin Ltd (Lessee). The equipment had a fair value of $369,824. This was also the present value of the lease payments .The lease agreement contained the following details: Lease term 5 years Economic life 6 years Annual rental payment in arrears commencing 30June 2021 $90,000 Residual Value at end of lease term $80,000 Residual Value guaranteed by lessee 80,ooo Interest rate implicit in lease 12% Lease is cancellable with permission of lessor, Jane Ltd .Lease is classified as a finance Lease by the Lessor . Required: (a)Prepare the Lease payment schedule for Austin Ltd, Lessee, for the first two years, for the year ended 30 June 2021 and for the year ended 30 June 2022.
P17–4 LEASE VERSUS PURCHASE JLB Corporation is attempting to determine whether to lease or purchase research equipment. The firm is in the 21% tax bracket, and its after-tax cost of debt is currently 8%. The terms of the lease and of the purchase are as follows: LEASE Annual end-of-year lease payments of $25,200 are required over the three-year life of the lease. All maintenance costs will be paid by the lessor; insurance and other costs will be borne by the lessee. The lessee will exercise its option to purchase the asset for $5,000 at termination of the lease. PURCHASE The equipment costs $60,000 and can be financed with a 14% loan requiring annual end-of-year payments of $25,844 for three years. JLB will depreciate the equipment under MACRS using a three-year recovery period. (See Table 4.2 for the applicable depreciation percentages.) JLB will pay $1,800 per year for a service contract that covers all maintenance costs; insurance and other costs will be borne by the JLB, who plans…
xercise 15-25 (Algo) Lessor; sales-type lease; residual value effect on financial statements [LO15-2, 15-6] At January 1, 2021, Café Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement. The lease agreement specifies annual payments of $32,000 beginning January 1, 2021, the beginning of the lease, and at each December 31 thereafter through 2028. The equipment was acquired recently by Crescent at a cost of $243,000 (its fair value) and was expected to have a useful life of 12 years with no salvage value at the end of its life. (Because the lease term is only 9 years, the asset does have an expected residual value at the end of the lease term of $73,596.) Both (a) the present value of the lease payments and (b) the present value of the residual value (i.e., the residual asset) are included in the lease receivable because the two amounts combine to allow the lessor to recover its net investment. Crescent seeks a 9% return on its lease investments.…
WITH SOLUTION/COMPUTATION 53. Neal Corp. entered into a nine-year lease on a warehouse on December 31, 2019. Lease payments of P52,000, which includes payments for non-lease component of P2,000 (at stand-alone selling price), are due annually, beginning on December 31, 2019, and every December 31 thereafter. Neal does not know the interest rate implicit in the lease; Neal’s incremental borrowing rate is 9%. What amount should Neal report as lease liability at December 31, 2019?a. 280,000 b. 291,200 c. 450,000 d. 468,000
XI. Direct Finance Lease – Lessee (PFRS 16)Problem 13. SMC Inc. leased a machine on January 1,2011 to SM Inc. with the following pertinentinformation:Annual rental payable at the beginning of each year P500,000Lease term 5 yearsUseful life of machine 6 yearsFair value of machine on January 1,2011 2,400,000Incremental borrowing rate of lessee 14%Implicit interest rate of lessor known to lessee 12%Bargain purchase option at the end of lease term 100,000Residual value of the machine 200,000Initial direct cost incurred by lessee 300,000Prepaid bonus paid by lessee 400,000Estimated restoration cost in which lessee has contractual obligation 1,000,000Required: Based on your audit, determine the following: ____________1. Initial amount recognized as right of use asset ____________2. Initial amount recognized as leased liability ____________3. Depreciation Expense in 2011 assuming cost model ____________4. Book value of right of use asset on December 31, 2012 ____________5. Current Lease…
WITH SOLUTION/COMPUTATION 55. On January 1, 2019, Babson, Inc., leased two automobiles for executive use. The lease requires Babson to make five annual payments of P13,000 beginning January 1, 2019. At the end of the lease term, Babson guarantees the residual value of the automobiles will total P10,000. The interest rate implicit in the lease is 9%. Babson’s recorded lease liability on initial recognition isa. 48, 620 b. 44,070 ` c. 35,620 d. 31,070
Exercise 21-8 The following facts pertain to a noncancelable lease agreement between Bridgeport Leasing Company and Indigo Company, a lessee. Inception date: May 1, 2017 Annual lease payment due at the beginning of each year, beginning with May 1, 2017 $20,253.44 Bargain-purchase option price at end of lease term $4,100 Lease term 5 years Economic life of leased equipment 10 years Lessor’s cost $64,000 Fair value of asset at May 1, 2017 $87,000 Lessor’s implicit rate 10 % Lessee’s incremental borrowing rate 10 % The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor. The lessee assumes responsibility for all executory costs. The expected residual value of the equipment at the end of 5 (10) years is $12,000 ($0). Click here to view factor tables Prepare a lease amortization schedule for Indigo Company for the 5-year lease term.
P45. Team, Inc. leased machinery with a fair value of P250,000 from Win Company on December 31, 2019. The contract is a six-year non-cancelable lease with an implicit rate of 10%. The lease requires an annual payment of P50,000 beginning December 31, 2019. Team, Inc.'s incremental borrowing rate is 12%. How much is the lease liability that Team, Inc. should report in its December 31, 2016 statement of financial position? (use four decimal places PV factor) A. P189,540 B. P200,000 C. P230,240 D. P239,540
H 22 A finance lease for 6 years has an annual payment in arrears of R24,000. The fair value of the lease at inception was R106,000. Using the sum of digits method, the liability for the lease at the end of year 2 is: Select one: a. R3 221 b. R3 700 c. R3 551 d. R3 461
WITH SOLUTION/COMPUTATION 56.On January 1, 2019, Harrow Co. as lessee signed a five year non-cancellable equipment lease with annual payments of P100,000 beginning December 31, 2018. The implicit interest rate is 10%. How much is the interest expense for the year ended December 31, 2018? 37,900 27,900 24,200 0
Problem 16-21 Financial statement effects of leases The Harris Company is the lessee on a four-year lease with the following payments at the end of each year: Year 1: $ 18,500 Year 2: $ 23,500 Year 3: $ 28,500 Year 4: $ 33,500 An appropriate discount rate is 7 percentage, yielding a present value of $86,637.a-1. If the lease is an operating lease, what will be the initial value of the right-of-use asset? a-2. If the lease is an operating lease, what will be the initial value of the lease liability? a-3. If the lease is an operating lease, what will be the lease expense shown on the income statement at the end of year 1? a-4. If the lease is an operating lease, what will be the interest expense shown on the income statement at the end of year 1? (Leave no cells blank – be certain to enter “0” wherever required.) a-5. If the lease is an operating lease, what will be the amortization expense shown on the income statement at…