The classification of lease for lessee. Given information: For the year 2016, Lease term is 6 years. Economic life of equipment is 8 years. Asset is not specialized in nature. Contract does not contain a purchase option. Fair value of the asset is $950,000. Implicit interest rate is 8% Annual lease payments are $190,000 due on Jan/1 each year.

Question

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Answer 1

Question

Chapter 18, Problem 18.5E

a.

To determine

The classification of lease for lessee.

Given information:

For the year 2016,

Lease term is 6 years.

Economic life of equipment is 8 years.

Asset is not specialized in nature.

Contract does not contain a purchase option.

Fair value of the asset is $950,000.

Implicit interest rate is 8%

Annual lease payments are $190,000 due on Jan/1 each year.

b.

To determine

To prepare: The journal entries for the lessee for commencement of the lease and for the first payment.

Given information:

For the year 2016,

Lease term is 6 years.

Economic life of equipment is 8 years.

Asset is not specialized in nature.

Contract does not contain a purchase option.

Fair value of the asset is $950,000.

Implicit interest rate is 8%

Annual lease payments are $190,000 due on Jan/1 each year.

c.

To determine

To prepare: The amortization tables for the finance lease transactions.

Given information:

For the year 2016,

Lease term is 6 years.

Economic life of equipment is 8 years.

Asset is not specialized in nature.

Contract does not contain a purchase option.

Fair value of the asset is $950,000.

Implicit interest rate is 8%

Annual lease payments are $190,000 due on Jan/1 each year.

d.

To determine

To prepare: The journal entries for the lessee for end of year one and for second year payment.

Given information:

For the year 2016,

Lease term is 5 years.

Economic life of equipment is 5 years.

Contract does not contain a purchase option.

Fair value of the asset is $275,000.

Implicit interest rate is 5%

Annual lease payments are $57,900 due on Jan/1 each year.

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Answer 2

Question

Chapter 18, Problem 18.5E

a.

To determine

The classification of lease for lessee.

Given information:

For the year 2016,

Lease term is 6 years.

Economic life of equipment is 8 years.

Asset is not specialized in nature.

Contract does not contain a purchase option.

Fair value of the asset is $950,000.

Implicit interest rate is 8%

Annual lease payments are $190,000 due on Jan/1 each year.

b.

To determine

To prepare: The journal entries for the lessee for commencement of the lease and for the first payment.

Given information:

For the year 2016,

Lease term is 6 years.

Economic life of equipment is 8 years.

Asset is not specialized in nature.

Contract does not contain a purchase option.

Fair value of the asset is $950,000.

Implicit interest rate is 8%

Annual lease payments are $190,000 due on Jan/1 each year.

c.

To determine

To prepare: The amortization tables for the finance lease transactions.

Given information:

For the year 2016,

Lease term is 6 years.

Economic life of equipment is 8 years.

Asset is not specialized in nature.

Contract does not contain a purchase option.

Fair value of the asset is $950,000.

Implicit interest rate is 8%

Annual lease payments are $190,000 due on Jan/1 each year.

d.

To determine

To prepare: The journal entries for the lessee for end of year one and for second year payment.

Given information:

For the year 2016,

Lease term is 5 years.

Economic life of equipment is 5 years.

Contract does not contain a purchase option.

Fair value of the asset is $275,000.

Implicit interest rate is 5%

Annual lease payments are $57,900 due on Jan/1 each year.

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Answer 3

Question

Chapter 18, Problem 18.5E

a.

To determine

The classification of lease for lessee.

Given information:

For the year 2016,

Lease term is 6 years.

Economic life of equipment is 8 years.

Asset is not specialized in nature.

Contract does not contain a purchase option.

Fair value of the asset is $950,000.

Implicit interest rate is 8%

Annual lease payments are $190,000 due on Jan/1 each year.

b.

To determine

To prepare: The journal entries for the lessee for commencement of the lease and for the first payment.

Given information:

For the year 2016,

Lease term is 6 years.

Economic life of equipment is 8 years.

Asset is not specialized in nature.

Contract does not contain a purchase option.

Fair value of the asset is $950,000.

Implicit interest rate is 8%

Annual lease payments are $190,000 due on Jan/1 each year.

c.

To determine

To prepare: The amortization tables for the finance lease transactions.

Given information:

For the year 2016,

Lease term is 6 years.

Economic life of equipment is 8 years.

Asset is not specialized in nature.

Contract does not contain a purchase option.

Fair value of the asset is $950,000.

Implicit interest rate is 8%

Annual lease payments are $190,000 due on Jan/1 each year.

d.

To determine

To prepare: The journal entries for the lessee for end of year one and for second year payment.

Given information:

For the year 2016,

Lease term is 5 years.

Economic life of equipment is 5 years.

Contract does not contain a purchase option.

Fair value of the asset is $275,000.

Implicit interest rate is 5%

Annual lease payments are $57,900 due on Jan/1 each year.

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Answer 4

Question

Chapter 18, Problem 18.5E

a.

To determine

The classification of lease for lessee.

Given information:

For the year 2016,

Lease term is 6 years.

Economic life of equipment is 8 years.

Asset is not specialized in nature.

Contract does not contain a purchase option.

Fair value of the asset is $950,000.

Implicit interest rate is 8%

Annual lease payments are $190,000 due on Jan/1 each year.

b.

To determine

To prepare: The journal entries for the lessee for commencement of the lease and for the first payment.

Given information:

For the year 2016,

Lease term is 6 years.

Economic life of equipment is 8 years.

Asset is not specialized in nature.

Contract does not contain a purchase option.

Fair value of the asset is $950,000.

Implicit interest rate is 8%

Annual lease payments are $190,000 due on Jan/1 each year.

c.

To determine

To prepare: The amortization tables for the finance lease transactions.

Given information:

For the year 2016,

Lease term is 6 years.

Economic life of equipment is 8 years.

Asset is not specialized in nature.

Contract does not contain a purchase option.

Fair value of the asset is $950,000.

Implicit interest rate is 8%

Annual lease payments are $190,000 due on Jan/1 each year.

d.

To determine

To prepare: The journal entries for the lessee for end of year one and for second year payment.

Given information:

For the year 2016,

Lease term is 5 years.

Economic life of equipment is 5 years.

Contract does not contain a purchase option.

Fair value of the asset is $275,000.

Implicit interest rate is 5%

Annual lease payments are $57,900 due on Jan/1 each year.

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Answer 5

Chapter 18, Problem 18.5E

a.

To determine

The classification of lease for lessee.

Given information:

For the year 2016,

Lease term is 6 years.

Economic life of equipment is 8 years.

Asset is not specialized in nature.

Contract does not contain a purchase option.

Fair value of the asset is $950,000.

Implicit interest rate is 8%

Annual lease payments are $190,000 due on Jan/1 each year.

b.

To determine

To prepare: The journal entries for the lessee for commencement of the lease and for the first payment.

Given information:

For the year 2016,

Lease term is 6 years.

Economic life of equipment is 8 years.

Asset is not specialized in nature.

Contract does not contain a purchase option.

Fair value of the asset is $950,000.

Implicit interest rate is 8%

Annual lease payments are $190,000 due on Jan/1 each year.

c.

To determine

To prepare: The amortization tables for the finance lease transactions.

Given information:

For the year 2016,

Lease term is 6 years.

Economic life of equipment is 8 years.

Asset is not specialized in nature.

Contract does not contain a purchase option.

Fair value of the asset is $950,000.

Implicit interest rate is 8%

Annual lease payments are $190,000 due on Jan/1 each year.

d.

To determine

To prepare: The journal entries for the lessee for end of year one and for second year payment.

Given information:

For the year 2016,

Lease term is 5 years.

Economic life of equipment is 5 years.

Contract does not contain a purchase option.

Fair value of the asset is $275,000.

Implicit interest rate is 5%

Annual lease payments are $57,900 due on Jan/1 each year.

Answer 6

Chapter 18, Problem 18.5E

a.

To determine

The classification of lease for lessee.

Given information:

For the year 2016,

Lease term is 6 years.

Economic life of equipment is 8 years.

Asset is not specialized in nature.

Contract does not contain a purchase option.

Fair value of the asset is $950,000.

Implicit interest rate is 8%

Annual lease payments are $190,000 due on Jan/1 each year.

Answer 7

Chapter 18, Problem 18.5E

a.

To determine

The classification of lease for lessee.

Given information:

For the year 2016,

Lease term is 6 years.

Economic life of equipment is 8 years.

Asset is not specialized in nature.

Contract does not contain a purchase option.

Fair value of the asset is $950,000.

Implicit interest rate is 8%

Annual lease payments are $190,000 due on Jan/1 each year.

Answer 8

b.

To determine

To prepare: The journal entries for the lessee for commencement of the lease and for the first payment.

Given information:

For the year 2016,

Lease term is 6 years.

Economic life of equipment is 8 years.

Asset is not specialized in nature.

Contract does not contain a purchase option.

Fair value of the asset is $950,000.

Implicit interest rate is 8%

Annual lease payments are $190,000 due on Jan/1 each year.

Answer 9

b.

To determine

To prepare: The journal entries for the lessee for commencement of the lease and for the first payment.

Given information:

For the year 2016,

Lease term is 6 years.

Economic life of equipment is 8 years.

Asset is not specialized in nature.

Contract does not contain a purchase option.

Fair value of the asset is $950,000.

Implicit interest rate is 8%

Annual lease payments are $190,000 due on Jan/1 each year.

Answer 10

c.

To determine

To prepare: The amortization tables for the finance lease transactions.

Given information:

For the year 2016,

Lease term is 6 years.

Economic life of equipment is 8 years.

Asset is not specialized in nature.

Contract does not contain a purchase option.

Fair value of the asset is $950,000.

Implicit interest rate is 8%

Annual lease payments are $190,000 due on Jan/1 each year.

Answer 11

c.

To determine

To prepare: The amortization tables for the finance lease transactions.

Given information:

For the year 2016,

Lease term is 6 years.

Economic life of equipment is 8 years.

Asset is not specialized in nature.

Contract does not contain a purchase option.

Fair value of the asset is $950,000.

Implicit interest rate is 8%

Annual lease payments are $190,000 due on Jan/1 each year.

Answer 12

d.

To determine

To prepare: The journal entries for the lessee for end of year one and for second year payment.

Given information:

For the year 2016,

Lease term is 5 years.

Economic life of equipment is 5 years.

Contract does not contain a purchase option.

Fair value of the asset is $275,000.

Implicit interest rate is 5%

Annual lease payments are $57,900 due on Jan/1 each year.

Answer 13

d.

To determine

To prepare: The journal entries for the lessee for end of year one and for second year payment.

Given information:

For the year 2016,

Lease term is 5 years.

Economic life of equipment is 5 years.

Contract does not contain a purchase option.

Fair value of the asset is $275,000.

Implicit interest rate is 5%

Annual lease payments are $57,900 due on Jan/1 each year.

Answer 14

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Answer 15

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Answer 16

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Answer 17

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