Larkspur Inc. wishes to lease machinery to Thiensville Company.
Thiensville wants the machinery for 4 years, although it has a
useful life of 10 years. The machinery has a fair value at the
commencement of the lease of $46,000, and Larkspur expects the
machinery to have a residual value at the end of the lease term of
$28,000. However, Thiensville does not guarantee any part of the
residual value. Thiensville does expect that the residual value
will be $44,000 instead of $28,000.
What would be the amount of the annual rental payments Larkspur
demands of Thiensville, assuming each payment will be made at the
end of each year and Larkspur wishes to earn a rate of return on
the lease of 4%
Larkspur Inc. wishes to lease machinery to Thiensville Company. Thiensville wants the machinery for 4 years,...
Kingbird Inc. wishes to lease machinery to Thiensville Company. Thiensville wants the machinery for 4 years, although it has a useful life of 10 years. The machinery has a fair value at the commencement of the lease of $49,000, and Kingbird expects the machinery to have a residual value at the end of the lease term of $25,000. However, Thiensville does not guarantee any part of the residual value. Thiensville does expect that the residual value will be $47,000 instead...
Marin Inc. wishes to lease machinery to Thiensville Company. Thiensville wants the machinery for 4 years, although it has a useful life of 10 years. The machinery has a fair value at the commencement of the lease of $49,000, and Marin expects the machinery to have a residual value at the end of the lease term of $25,000. However, Thiensville does not guarantee any part of the residual value. Thiensville does expect that the residual value will be $47,000 instead...
Tamarisk Inc. wishes to lease machinery to Thiensville Company. Thiensville wants the machinery for 4 years, although it has a useful life of 10 years. The machinery has a fair value at the commencement of the lease of $39,000, and Tamarisk expects the machinery to have a residual value at the end of the lease term of $30,000. However, Thiensville does not guarantee any part of the residual value. Thiensville does expect that the residual value will be $37,000 instead...
Skysong Inc. wishes to lease machinery to Thiensville Company. Thiensville wants the machinery for 4 years, although it has a useful life of 10years. The machinery has a fair value at the commencement of the lease of $42,000, and Skysong epects the machinery to have a residual value at the end of the lease term of $29,000. However, Thiensville does not guarantee any part of the residual value. Thiensvile does expect that the residual value will be $40,000 instead of...
Metlock Company is negotiating to lease a piece of equipment to MTBA, Inc. MTBA requests that the lease be for 9 years. The equipment has a useful life of 10 years. Metlock wants a guarantee that the residual value of the equipment at the end of the lease is at least $4,000. MTBA agrees to guarantee a residual value of this amount though it expects the residual value of the equipment to be only $2,000 at the end of the...
Sage Hill Company is negotiating to lease a piece of equipment to MTBA, Inc. MTBA requests that the lease be for 9 years. The equipment has a useful life of 10 years. Sage Hill wants a guarantee that the residual value of the equipment at the end of the lease is at least $4,000. MTBA agrees to guarantee a residual value of this amount though it expects the residual value of the equipment to be only $2,500 at the end...
Brief Exercise 21A-8 Cardinal Company is negotiating to lease a piece of equipment to MTBA, Inc. MTBA requests that the lease be for 9 years. The equipment has a useful life of 10 years. Cardinal wants a guarantee that the residual value of the equipment at the end of the lease is at least $5,000. MTBA agrees to guarantee a residual value of this amount though it expects the residual value of the equipment to be only $2,500 at the...
Brief Exercise 21A-8
Kingbird Company is negotiating to lease a piece of equipment to
MTBA, Inc. MTBA requests that the lease be for 9 years. The
equipment has a useful life of 10 years. Kingbird wants a guarantee
that the residual value of the equipment at the end of the lease is
at least $4,000. MTBA agrees to guarantee a residual value of this
amount though it expects the residual value of the equipment to be
only $2,000 at the...
Larkspur Company leased equipment from Costner Company, beginning on December 31, 2016. The lease term is 4 years and requires equal rental payments of $65.962 at the beginning of each year of the lease, starting on the commencement date (December 31, 2016). The equipment has a fair value at the commencement date of the lease of $230,000, an estimated useful life of 4 years, and no estimated residual value. The appropriate interest rate is 10%. Click here to view the...
Exercise 21A-19 a-d
Blue Corporation leased equipment to Larkspur, Inc. on January
1, 2017. The lease agreement called for annual rental payments of
$1,381 at the beginning of each year of the 3-year lease. The
equipment has an economic useful life of 7 years, a fair value of
$10,000, a book value of $8,000, and Blue expects a residual value
of $7,500 at the end of the lease term. Blue set the lease payments
with the intent of earning a...