t January 1, 2021, Café Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement The lease greement specifies annual payments of $27000 beginning January 1, 2021, the beginning of the lease, and at each December 31 nereafter through 2028. The equipment was acquired recently by Crescent at a cost of $189,000 (its fair value) and was expected to ave a useful life of 13 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 $42.341) Crescent seeks a 10% return on its lease investments. By this arrangement, the lease is deemed to be an operating lease (EVof $1, PV. of S1. EVA of $1. PVA ot 51. EVAD of $1 and PVAD of S (Use appropriate factor(s) from the tables provided.) Required: 1. What will be the effect of the lease on Cafe Med's eamings for the first year (ignore taxes)? (Enter decreases with negetive sign.) 2. What will be the balances in the balance sheet accounts related to the lease at the end of the first year for Cafe Med (ignore taxes) (For all requirements, round your intermediate calculetions end final enswers to the nearest whole dollar) Effoct oo eaminas
t January 1, 2021, Café Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement The lease greement specifies annual payments of $27000 beginning January 1, 2021, the beginning of the lease, and at each December 31 nereafter through 2028. The equipment was acquired recently by Crescent at a cost of $189,000 (its fair value) and was expected to ave a useful life of 13 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 $42.341) Crescent seeks a 10% return on its lease investments. By this arrangement, the lease is deemed to be an operating lease (EVof $1, PV. of S1. EVA of $1. PVA ot 51. EVAD of $1 and PVAD of S (Use appropriate factor(s) from the tables provided.) Required: 1. What will be the effect of the lease on Cafe Med's eamings for the first year (ignore taxes)? (Enter decreases with negetive sign.) 2. What will be the balances in the balance sheet accounts related to the lease at the end of the first year for Cafe Med (ignore taxes) (For all requirements, round your intermediate calculetions end final enswers to the nearest whole dollar) Effoct oo eaminas
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter11: Notes, Bonds, And Leases
Section: Chapter Questions
Problem 28E
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