The classification of lease for lessee. Given information: Lease term is 7 years. Economic life of equipment is 10 years. Fair value of the asset is $1,700,479. Carrying value of asset is $1,500,000. Residual value guaranteed by third party is $100,000. Interest rate is 9% Annual lease payments are $300,000 due on Jan/1 each year

Question

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Answer 1

Question

Chapter 18, Problem 18.1P

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $1,700,479.

Carrying value of asset is $1,500,000.

Residual value guaranteed by third party is $100,000.

Interest rate is 9%

Annual lease payments are $300,000 due on Jan/1 each year

b.

To determine

To prepare: Amortization tables for the lease term.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $1,700,479.

Carrying value of asset is $1,500,000.

Residual value guaranteed by third party is $100,000.

Interest rate is 9%

Annual lease payments are $300,000 due on Jan/1 each year

c.

To determine

To prepare: The journal entries for the lessee.

Given information:

Lease term is 5 years.

Economic life of equipment is 8 years.

Fair value of the asset is $650,000.

Carrying value of asset is $650,000.

Residual value guaranteed by third party is $100,000.

Initial direct cost to lessee is $10,000.

Interest rate is 10%

Lessor is certain about receipt of lease payments and residual value.

Annual lease payments are $120,000 due on Jan/1 each year

d.

To determine

To prepare: The journal entries for the lessee.

Given information:

Lease term is 5 years.

Economic life of equipment is 8 years.

Fair value of the asset is $650,000.

Carrying value of asset is $650,000.

Residual value guaranteed by third party is $100,000.

Initial direct cost to lessee is $10,000.

Interest rate is 10%

Lessor is certain about receipt of lease payments and residual value.

Annual lease payments are $120,000 due on Jan/1 each year

e.

To determine

The classification of lease for lessor.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $1,700,479.

Carrying value of asset is $1,500,000.

Residual value guaranteed by third party is $100,000.

Interest rate is 9%

Annual lease payments are $300,000 due on Jan/1 each year

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Answer 2

Question

Chapter 18, Problem 18.1P

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $1,700,479.

Carrying value of asset is $1,500,000.

Residual value guaranteed by third party is $100,000.

Interest rate is 9%

Annual lease payments are $300,000 due on Jan/1 each year

b.

To determine

To prepare: Amortization tables for the lease term.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $1,700,479.

Carrying value of asset is $1,500,000.

Residual value guaranteed by third party is $100,000.

Interest rate is 9%

Annual lease payments are $300,000 due on Jan/1 each year

c.

To determine

To prepare: The journal entries for the lessee.

Given information:

Lease term is 5 years.

Economic life of equipment is 8 years.

Fair value of the asset is $650,000.

Carrying value of asset is $650,000.

Residual value guaranteed by third party is $100,000.

Initial direct cost to lessee is $10,000.

Interest rate is 10%

Lessor is certain about receipt of lease payments and residual value.

Annual lease payments are $120,000 due on Jan/1 each year

d.

To determine

To prepare: The journal entries for the lessee.

Given information:

Lease term is 5 years.

Economic life of equipment is 8 years.

Fair value of the asset is $650,000.

Carrying value of asset is $650,000.

Residual value guaranteed by third party is $100,000.

Initial direct cost to lessee is $10,000.

Interest rate is 10%

Lessor is certain about receipt of lease payments and residual value.

Annual lease payments are $120,000 due on Jan/1 each year

e.

To determine

The classification of lease for lessor.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $1,700,479.

Carrying value of asset is $1,500,000.

Residual value guaranteed by third party is $100,000.

Interest rate is 9%

Annual lease payments are $300,000 due on Jan/1 each year

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Answer 3

Question

Chapter 18, Problem 18.1P

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $1,700,479.

Carrying value of asset is $1,500,000.

Residual value guaranteed by third party is $100,000.

Interest rate is 9%

Annual lease payments are $300,000 due on Jan/1 each year

b.

To determine

To prepare: Amortization tables for the lease term.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $1,700,479.

Carrying value of asset is $1,500,000.

Residual value guaranteed by third party is $100,000.

Interest rate is 9%

Annual lease payments are $300,000 due on Jan/1 each year

c.

To determine

To prepare: The journal entries for the lessee.

Given information:

Lease term is 5 years.

Economic life of equipment is 8 years.

Fair value of the asset is $650,000.

Carrying value of asset is $650,000.

Residual value guaranteed by third party is $100,000.

Initial direct cost to lessee is $10,000.

Interest rate is 10%

Lessor is certain about receipt of lease payments and residual value.

Annual lease payments are $120,000 due on Jan/1 each year

d.

To determine

To prepare: The journal entries for the lessee.

Given information:

Lease term is 5 years.

Economic life of equipment is 8 years.

Fair value of the asset is $650,000.

Carrying value of asset is $650,000.

Residual value guaranteed by third party is $100,000.

Initial direct cost to lessee is $10,000.

Interest rate is 10%

Lessor is certain about receipt of lease payments and residual value.

Annual lease payments are $120,000 due on Jan/1 each year

e.

To determine

The classification of lease for lessor.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $1,700,479.

Carrying value of asset is $1,500,000.

Residual value guaranteed by third party is $100,000.

Interest rate is 9%

Annual lease payments are $300,000 due on Jan/1 each year

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Answer 4

Question

Chapter 18, Problem 18.1P

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $1,700,479.

Carrying value of asset is $1,500,000.

Residual value guaranteed by third party is $100,000.

Interest rate is 9%

Annual lease payments are $300,000 due on Jan/1 each year

b.

To determine

To prepare: Amortization tables for the lease term.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $1,700,479.

Carrying value of asset is $1,500,000.

Residual value guaranteed by third party is $100,000.

Interest rate is 9%

Annual lease payments are $300,000 due on Jan/1 each year

c.

To determine

To prepare: The journal entries for the lessee.

Given information:

Lease term is 5 years.

Economic life of equipment is 8 years.

Fair value of the asset is $650,000.

Carrying value of asset is $650,000.

Residual value guaranteed by third party is $100,000.

Initial direct cost to lessee is $10,000.

Interest rate is 10%

Lessor is certain about receipt of lease payments and residual value.

Annual lease payments are $120,000 due on Jan/1 each year

d.

To determine

To prepare: The journal entries for the lessee.

Given information:

Lease term is 5 years.

Economic life of equipment is 8 years.

Fair value of the asset is $650,000.

Carrying value of asset is $650,000.

Residual value guaranteed by third party is $100,000.

Initial direct cost to lessee is $10,000.

Interest rate is 10%

Lessor is certain about receipt of lease payments and residual value.

Annual lease payments are $120,000 due on Jan/1 each year

e.

To determine

The classification of lease for lessor.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $1,700,479.

Carrying value of asset is $1,500,000.

Residual value guaranteed by third party is $100,000.

Interest rate is 9%

Annual lease payments are $300,000 due on Jan/1 each year

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Answer 5

Chapter 18, Problem 18.1P

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $1,700,479.

Carrying value of asset is $1,500,000.

Residual value guaranteed by third party is $100,000.

Interest rate is 9%

Annual lease payments are $300,000 due on Jan/1 each year

b.

To determine

To prepare: Amortization tables for the lease term.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $1,700,479.

Carrying value of asset is $1,500,000.

Residual value guaranteed by third party is $100,000.

Interest rate is 9%

Annual lease payments are $300,000 due on Jan/1 each year

c.

To determine

To prepare: The journal entries for the lessee.

Given information:

Lease term is 5 years.

Economic life of equipment is 8 years.

Fair value of the asset is $650,000.

Carrying value of asset is $650,000.

Residual value guaranteed by third party is $100,000.

Initial direct cost to lessee is $10,000.

Interest rate is 10%

Lessor is certain about receipt of lease payments and residual value.

Annual lease payments are $120,000 due on Jan/1 each year

d.

To determine

To prepare: The journal entries for the lessee.

Given information:

Lease term is 5 years.

Economic life of equipment is 8 years.

Fair value of the asset is $650,000.

Carrying value of asset is $650,000.

Residual value guaranteed by third party is $100,000.

Initial direct cost to lessee is $10,000.

Interest rate is 10%

Lessor is certain about receipt of lease payments and residual value.

Annual lease payments are $120,000 due on Jan/1 each year

e.

To determine

The classification of lease for lessor.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $1,700,479.

Carrying value of asset is $1,500,000.

Residual value guaranteed by third party is $100,000.

Interest rate is 9%

Annual lease payments are $300,000 due on Jan/1 each year

Answer 6

Chapter 18, Problem 18.1P

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $1,700,479.

Carrying value of asset is $1,500,000.

Residual value guaranteed by third party is $100,000.

Interest rate is 9%

Annual lease payments are $300,000 due on Jan/1 each year

Answer 7

Chapter 18, Problem 18.1P

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $1,700,479.

Carrying value of asset is $1,500,000.

Residual value guaranteed by third party is $100,000.

Interest rate is 9%

Annual lease payments are $300,000 due on Jan/1 each year

Answer 8

b.

To determine

To prepare: Amortization tables for the lease term.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $1,700,479.

Carrying value of asset is $1,500,000.

Residual value guaranteed by third party is $100,000.

Interest rate is 9%

Annual lease payments are $300,000 due on Jan/1 each year

Answer 9

b.

To determine

To prepare: Amortization tables for the lease term.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $1,700,479.

Carrying value of asset is $1,500,000.

Residual value guaranteed by third party is $100,000.

Interest rate is 9%

Annual lease payments are $300,000 due on Jan/1 each year

Answer 10

c.

To determine

To prepare: The journal entries for the lessee.

Given information:

Lease term is 5 years.

Economic life of equipment is 8 years.

Fair value of the asset is $650,000.

Carrying value of asset is $650,000.

Residual value guaranteed by third party is $100,000.

Initial direct cost to lessee is $10,000.

Interest rate is 10%

Lessor is certain about receipt of lease payments and residual value.

Annual lease payments are $120,000 due on Jan/1 each year

Answer 11

c.

To determine

To prepare: The journal entries for the lessee.

Given information:

Lease term is 5 years.

Economic life of equipment is 8 years.

Fair value of the asset is $650,000.

Carrying value of asset is $650,000.

Residual value guaranteed by third party is $100,000.

Initial direct cost to lessee is $10,000.

Interest rate is 10%

Lessor is certain about receipt of lease payments and residual value.

Annual lease payments are $120,000 due on Jan/1 each year

Answer 12

d.

To determine

To prepare: The journal entries for the lessee.

Given information:

Lease term is 5 years.

Economic life of equipment is 8 years.

Fair value of the asset is $650,000.

Carrying value of asset is $650,000.

Residual value guaranteed by third party is $100,000.

Initial direct cost to lessee is $10,000.

Interest rate is 10%

Lessor is certain about receipt of lease payments and residual value.

Annual lease payments are $120,000 due on Jan/1 each year

Answer 13

d.

To determine

To prepare: The journal entries for the lessee.

Given information:

Lease term is 5 years.

Economic life of equipment is 8 years.

Fair value of the asset is $650,000.

Carrying value of asset is $650,000.

Residual value guaranteed by third party is $100,000.

Initial direct cost to lessee is $10,000.

Interest rate is 10%

Lessor is certain about receipt of lease payments and residual value.

Annual lease payments are $120,000 due on Jan/1 each year

Answer 14

e.

To determine

The classification of lease for lessor.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $1,700,479.

Carrying value of asset is $1,500,000.

Residual value guaranteed by third party is $100,000.

Interest rate is 9%

Annual lease payments are $300,000 due on Jan/1 each year

Answer 15

e.

To determine

The classification of lease for lessor.

Given information:

Lease term is 7 years.

Economic life of equipment is 10 years.

Fair value of the asset is $1,700,479.

Carrying value of asset is $1,500,000.

Residual value guaranteed by third party is $100,000.

Interest rate is 9%

Annual lease payments are $300,000 due on Jan/1 each year

Answer 16

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Answer 17

Expert Solution & Answer

Answer 18

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Answer 19

Ch. 18 - Does the lessee become the owner of the equipment...Ch. 18 - Prob. 18.2Q Ch. 18 - Prob. 18.3Q Ch. 18 - Prob. 18.4Q Ch. 18 - Prob. 18.5Q Ch. 18 - Prob. 18.6Q Ch. 18 - Prob. 18.7Q Ch. 18 - Prob. 18.8Q Ch. 18 - Prob. 18.9Q Ch. 18 - Prob. 18.10Q

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Chapter 18 Solutions