The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Pina Company, a lessee. Commencement date January 1, Annual lease payment due at the beginning of each year, beginning with January 1, $104,218 Residual value of equipment at end of lease term, guaranteed by the lessee $51,000 Expected residual value of equipment at end of lease term $46,000 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at January 1, $540,000 Lessor’s implicit rate 9 % Lessee’s incremental borrowing rate 9 % The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment. Click here to view factor tables. (a) Partially correct answer icon Your answer is partially correct. Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to 0 decimal places e.g. 5,275.) PINA COMPANY (Lessee) Lease Amortization Schedule Date Annual Lease Payment Plus GRV Interest on Liability Reduction of Lease Liability Lease Liability 1/1/20 $enter a dollar amount rounded to 0 decimal places $enter a dollar amount rounded to 0 decimal places $enter a dollar amount rounded to 0 decimal places $enter a dollar amount rounded to 0 decimal places 1/1/20 enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places 1/1/21 enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places 1/1/22 enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places 1/1/23 enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places 1/1/24 enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places 1/1/25 enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places 12/31/26 enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places $enter a total amount $enter a total amount $enter a total amount eTextbook and Media List of Accounts Save for Later Attempts: 1 of 3 used Submit Answer (b) The parts of this question must be completed in order. This part will be available when you complete the part above. (c) The parts of this question must be completed in order. This part will be available when you complete the part above.
The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Pina Company, a lessee. Commencement date January 1, Annual lease payment due at the beginning of each year, beginning with January 1, $104,218 Residual value of equipment at end of lease term, guaranteed by the lessee $51,000 Expected residual value of equipment at end of lease term $46,000 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at January 1, $540,000 Lessor’s implicit rate 9 % Lessee’s incremental borrowing rate 9 % The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment. Click here to view factor tables. (a) Partially correct answer icon Your answer is partially correct. Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to 0 decimal places e.g. 5,275.) PINA COMPANY (Lessee) Lease Amortization Schedule Date Annual Lease Payment Plus GRV Interest on Liability Reduction of Lease Liability Lease Liability 1/1/20 $enter a dollar amount rounded to 0 decimal places $enter a dollar amount rounded to 0 decimal places $enter a dollar amount rounded to 0 decimal places $enter a dollar amount rounded to 0 decimal places 1/1/20 enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places 1/1/21 enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places 1/1/22 enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places 1/1/23 enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places 1/1/24 enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places 1/1/25 enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places 12/31/26 enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places $enter a total amount $enter a total amount $enter a total amount eTextbook and Media List of Accounts Save for Later Attempts: 1 of 3 used Submit Answer (b) The parts of this question must be completed in order. This part will be available when you complete the part above. (c) The parts of this question must be completed in order. This part will be available when you complete the part above.
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter10: Long-term Liabilities
Section: Chapter Questions
Problem 10.5P
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35....
The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Pina Company, a lessee.
The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment.
Click here to view factor tables.
Commencement date | January 1, | ||
Annual lease payment due at the beginning of each year, beginning with January 1, |
$104,218 | ||
Residual value of equipment at end of lease term, guaranteed by the lessee |
$51,000 | ||
Expected residual value of equipment at end of lease term | $46,000 | ||
Lease term | 6 | years | |
Economic life of leased equipment | 6 | years | |
Fair value of asset at January 1, | $540,000 | ||
Lessor’s implicit rate | 9 | % | |
Lessee’s incremental borrowing rate | 9 | % |
The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment.
Click here to view factor tables.
(a)
Partially correct answer icon
Your answer is partially correct.
Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to 0 decimal places e.g. 5,275.)
PINA COMPANY (Lessee)
Lease Amortization Schedule |
||||||||
---|---|---|---|---|---|---|---|---|
Date
|
Annual Lease
Payment Plus GRV |
Interest on
Liability |
Reduction of Lease
Liability |
Lease Liability
|
||||
1/1/20 |
$enter a dollar amount rounded to 0 decimal places
|
$enter a dollar amount rounded to 0 decimal places
|
$enter a dollar amount rounded to 0 decimal places
|
$enter a dollar amount rounded to 0 decimal places
|
||||
1/1/20 |
enter a dollar amount rounded to 0 decimal places
|
enter a dollar amount rounded to 0 decimal places
|
enter a dollar amount rounded to 0 decimal places
|
enter a dollar amount rounded to 0 decimal places
|
||||
1/1/21 |
enter a dollar amount rounded to 0 decimal places
|
enter a dollar amount rounded to 0 decimal places
|
enter a dollar amount rounded to 0 decimal places
|
enter a dollar amount rounded to 0 decimal places
|
||||
1/1/22 |
enter a dollar amount rounded to 0 decimal places
|
enter a dollar amount rounded to 0 decimal places
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enter a dollar amount rounded to 0 decimal places
|
enter a dollar amount rounded to 0 decimal places
|
||||
1/1/23 |
enter a dollar amount rounded to 0 decimal places
|
enter a dollar amount rounded to 0 decimal places
|
enter a dollar amount rounded to 0 decimal places
|
enter a dollar amount rounded to 0 decimal places
|
||||
1/1/24 |
enter a dollar amount rounded to 0 decimal places
|
enter a dollar amount rounded to 0 decimal places
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enter a dollar amount rounded to 0 decimal places
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enter a dollar amount rounded to 0 decimal places
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||||
1/1/25 |
enter a dollar amount rounded to 0 decimal places
|
enter a dollar amount rounded to 0 decimal places
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enter a dollar amount rounded to 0 decimal places
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enter a dollar amount rounded to 0 decimal places
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||||
12/31/26 |
enter a dollar amount rounded to 0 decimal places
|
enter a dollar amount rounded to 0 decimal places
|
enter a dollar amount rounded to 0 decimal places
|
enter a dollar amount rounded to 0 decimal places | ||||
$enter a total amount
|
$enter a total amount
|
$enter a total amount
|
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(b)
The parts of this question must be completed in order. This part will be available when you complete the part above.(c)
The parts of this question must be completed in order. This part will be available when you complete the part above.Expert Solution
Step 1
A table that shows the complete periodic loan payments, the principal loan amount, and the interest for each payment until the loan is repaid at the end of its term is called the loan amortization schedule. The loan amortization schedule table helps a lender to keep track of loan payments.
A lease is a legal contract between two-party, outlining the terms under which one party agrees to rent assets owned by another party. The lessee uses the assets and guarantees the lessor with regular payments for a specified period.
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