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On June 30, 2024, Blue, Incorporated leased a machine from Large Leasing Corporation. The lease agreement calls for Blue to make semiannual lease payments of $180,194 over a five-year lease term, payable each June 30 and December 31, with the first payment on June 30, 2024. Blue's incremental borrowing rate is 8%, the same rate Big uses to calculate lease payment amounts. Depreciation is recorded on a straight-line basis at the end of each fiscal year. Large constructed the machine at a cost of $1,268,000. 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) Required: 1. Determine the price at which Large is "selling" the machine (present value of the lease payments) on June 30, 2024. 2. What would be the amounts related to the lease that Large would report in its balance sheet at December 31, 2024? (Ignore taxes.) 3. What would be the amounts related to the lease that Large would report in its income statement for the year ended December 31, 2024? (Ignore taxes.) Note: For all the requirements, round final answers to the nearest whole dollar amounts. Drecept value

On June 30, 2024, Blue, Incorporated leased a machine from Large Leasing Corporation. The lease agreement calls for Blue to make semiannual lease payments of $180,194 over a five-year lease term, payable each June 30 and December 31, with the first payment on June 30, 2024. Blue's incremental borrowing rate is 8%, the same rate Big uses to calculate lease payment amounts. Depreciation is recorded on a straight-line basis at the end of each fiscal year. Large constructed the machine at a cost of $1,268,000. 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) Required: 1. Determine the price at which Large is "selling" the machine (present value of the lease payments) on June 30, 2024. 2. What would be the amounts related to the lease that Large would report in its balance sheet at December 31, 2024? (Ignore taxes.) 3. What would be the amounts related to the lease that Large would report in its income statement for the year ended December 31, 2024? (Ignore taxes.) Note: For all the requirements, round final answers to the nearest whole dollar amounts. Drecept value

Intermediate Accounting: Reporting And Analysis
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 1E: Determining Type of Lease and Subsequent Accounting On January 1, 2019, Caswell Company signs a...
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On June 30, 2024, Blue, Incorporated leased a machine from Large Leasing Corporation. The lease agreement calls for Blue to make semiannual lease payments of $180,194 over a five-year lease term, payable each June 30 and December 31, with the first payment on June 30, 2024. Blue's incremental borrowing rate is 8%, the same rate Big uses to calculate lease payment amounts. Depreciation is recorded on a straight-line basis at the end of each fiscal year. Large constructed the machine at a cost of $1,268,000. 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) Required: 1. Determine the price at which Large is "selling" the machine (present value of the lease payments) on June 30, 2024. 2. What would be the amounts related to the lease that Large would report in its balance sheet at December 31, 2024? (Ignore taxes.) 3. What would be the amounts related to the lease that Large would report in its income statement for the year ended December 31, 2024? (Ignore taxes.) Note: For all the requirements, round final answers to the nearest whole dollar amounts. 1. Present value 2. Lease receivable 3. Income
Transcribed Image Text:On June 30, 2024, Blue, Incorporated leased a machine from Large Leasing Corporation. The lease agreement calls for Blue to make semiannual lease payments of $180,194 over a five-year lease term, payable each June 30 and December 31, with the first payment on June 30, 2024. Blue's incremental borrowing rate is 8%, the same rate Big uses to calculate lease payment amounts. Depreciation is recorded on a straight-line basis at the end of each fiscal year. Large constructed the machine at a cost of $1,268,000. 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) Required: 1. Determine the price at which Large is "selling" the machine (present value of the lease payments) on June 30, 2024. 2. What would be the amounts related to the lease that Large would report in its balance sheet at December 31, 2024? (Ignore taxes.) 3. What would be the amounts related to the lease that Large would report in its income statement for the year ended December 31, 2024? (Ignore taxes.) Note: For all the requirements, round final answers to the nearest whole dollar amounts. 1. Present value 2. Lease receivable 3. Income
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