Lessor Accounting Issues Rexon Company leases non-specialized equipment to Ten-Care Company beginning January 1, 2019. The lease terms, provisions, and related events are as follows:
1. The lease term is 8 years. The lease is noncancelable and requires equal rental payments to be made at the end of each year.
2. The cost of the equipment is $500,000. The equipment has an estimated life of 8 years and has a zero estimated value at the end of that time.
3. The equipment has a fair value of $500,000.
4. Ten-Ore agrees to pay all executory costs directly to a third party.
5. The lease contains no renewal or bargain purchase option.
6. The interest rate implicit in the lease is 14%.
7. The initial direct costs are insignificant and assumed to be zero.
8. It is probable that Rexon will collect the lease payments plus any amount necessary to satisfy a residual value guarantee.
Required:
Accounting Information Systems
Corporate Financial Accounting
Financial And Managerial Accounting
College Accounting, Chapters 1-27
Financial Accounting
Managerial Accounting: The Cornerstone of Business Decision-Making
Financial & Managerial Accounting
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
Accounting Information Systems
Brief Principles of Macroeconomics (MindTap Course List)
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
Principles of Economics (MindTap Course List)
MKTG 12:STUDENT ED.-TEXT
Essentials of Business Communication (MindTap Course List)
Principles of Microeconomics (MindTap Course List)
Contemporary Marketing
Foundations of Business (MindTap Course List)
Management, Loose-Leaf Version
Principles of Macroeconomics (MindTap Course List)
STATISTICS F/BUSINESS+ECONOMICS-TEXT
Essentials of Economics (MindTap Course List)
Fundamentals of Financial Management (MindTap Course List)
Financial Accounting
Financial & Managerial Accounting
College Accounting (Book Only): A Career Approach
Accounting (Text Only)
Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
Exploring Economics
Statistics for Business & Economics, Revised (MindTap Course List)
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
College Accounting (Book Only): A Career Approach
Fundamentals of Financial Management (MindTap Course List)
Principles of Macroeconomics (MindTap Course List)
Pkg Acc Infor Systems MS VISIO CD
Survey of Accounting (Accounting I)
PAYROLL ACCT.,2019 ED.(LL)-TEXT
Corporate Financial Accounting
Economics For Today
Purchasing and Supply Chain Management
Microeconomics
Economics (MindTap Course List)
Practical Management Science
Macroeconomics
Cornerstones of Cost Management (Cornerstones Series)
Managerial Accounting
Cornerstones of Financial Accounting
Economics: Private and Public Choice (MindTap Course List)
Microeconomics: Private and Public Choice (MindTap Course List)
Understanding Management (MindTap Course List)
MACROECONOMICS FOR TODAY
Macroeconomics: Private and Public Choice (MindTap Course List)