On January 1, 2024, National Insulation Corporation (NIC) leased equipment from United Leasing under a finance lease. Lease payments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by NIC. Portions of the United Leasing’s lease amortization schedule appear below: January 1 Payments Effective Interest Decrease in Balance Outstanding Balance 2024 $ 244,813 2024 $ 27,000 $ 27,000 $ 217,813 2025 $ 27,000 $ 23,959 $ 3,041 $ 214,772 2026 $ 27,000 $ 23,625 $ 3,375 $ 211,397 2027 $ 27,000 $ 23,254 $ 3,746 $ 207,651 2028 $ 27,000 $ 22,842 $ 4,158 $ 203,493 2029 $ 27,000 $ 22,384 $ 4,616 $ 198,877 — — — — — — — — — — — — — — — 2041 $ 27,000 $ 10,852 $ 16,148 $ 82,505 2042 $ 27,000 $ 9,076 $ 17,924 $ 64,581 2043 $ 27,000 $ 7,104 $ 19,896 $ 44,685 2044 $ 49,600 $ 4,915 $ 44,685 $ 0 What is the lease term in years? 20 years What is the asset’s residual value expected at the end of the lease term? What is the effective annual interest rate? Note: Enter your answer as a percent rounded to 1 decimal place. What is the total amount of lease payments for United? $589,600 What is the total amount of lease payments for NIC? What is United’s net investment at the beginning of the lease (after the first payment)? What is United’s total effective interest revenue recorded over the term of the lease? What amount would NIC record as a right-of-use asset at the beginning of the lease? Note: Round your answers to nearest whole dollar.
On January 1, 2024, National Insulation Corporation (NIC) leased equipment from United Leasing under a finance lease. Lease payments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by NIC. Portions of the United Leasing’s lease amortization schedule appear below: January 1 Payments Effective Interest Decrease in Balance Outstanding Balance 2024 $ 244,813 2024 $ 27,000 $ 27,000 $ 217,813 2025 $ 27,000 $ 23,959 $ 3,041 $ 214,772 2026 $ 27,000 $ 23,625 $ 3,375 $ 211,397 2027 $ 27,000 $ 23,254 $ 3,746 $ 207,651 2028 $ 27,000 $ 22,842 $ 4,158 $ 203,493 2029 $ 27,000 $ 22,384 $ 4,616 $ 198,877 — — — — — — — — — — — — — — — 2041 $ 27,000 $ 10,852 $ 16,148 $ 82,505 2042 $ 27,000 $ 9,076 $ 17,924 $ 64,581 2043 $ 27,000 $ 7,104 $ 19,896 $ 44,685 2044 $ 49,600 $ 4,915 $ 44,685 $ 0 What is the lease term in years? 20 years What is the asset’s residual value expected at the end of the lease term? What is the effective annual interest rate? Note: Enter your answer as a percent rounded to 1 decimal place. What is the total amount of lease payments for United? $589,600 What is the total amount of lease payments for NIC? What is United’s net investment at the beginning of the lease (after the first payment)? What is United’s total effective interest revenue recorded over the term of the lease? What amount would NIC record as a right-of-use asset at the beginning of the lease? Note: Round your answers to nearest whole dollar.
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 15E: Lease Income and Expense Reuben Company retires a machine from active use on January 2, 2019, for...
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On January 1, 2024, National Insulation Corporation (NIC) leased equipment from United Leasing under a finance lease. Lease payments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by NIC. Portions of the United Leasing’s lease amortization schedule appear below:
| January 1 | Payments | Effective Interest | Decrease in Balance | Outstanding Balance |
|---|---|---|---|---|
| 2024 | $ 244,813 | |||
| 2024 | $ 27,000 | $ 27,000 | $ 217,813 | |
| 2025 | $ 27,000 | $ 23,959 | $ 3,041 | $ 214,772 |
| 2026 | $ 27,000 | $ 23,625 | $ 3,375 | $ 211,397 |
| 2027 | $ 27,000 | $ 23,254 | $ 3,746 | $ 207,651 |
| 2028 | $ 27,000 | $ 22,842 | $ 4,158 | $ 203,493 |
| 2029 | $ 27,000 | $ 22,384 | $ 4,616 | $ 198,877 |
| — | — | — | — | — |
| — | — | — | — | — |
| — | — | — | — | — |
| 2041 | $ 27,000 | $ 10,852 | $ 16,148 | $ 82,505 |
| 2042 | $ 27,000 | $ 9,076 | $ 17,924 | $ 64,581 |
| 2043 | $ 27,000 | $ 7,104 | $ 19,896 | $ 44,685 |
| 2044 | $ 49,600 | $ 4,915 | $ 44,685 | $ 0 |
- What is the lease term in years? 20 years
- What is the asset’s residual value expected at the end of the lease term?
- What is the effective annual interest rate?
Note: Enter your answer as a percent rounded to 1 decimal place.
- What is the total amount of lease payments for United? $589,600
- What is the total amount of lease payments for NIC?
- What is United’s net investment at the beginning of the lease (after the first payment)?
- What is United’s total effective interest revenue recorded over the term of the lease?
- What amount would NIC record as a right-of-use asset at the beginning of the lease?
Note: Round your answers to nearest whole dollar.
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