Answer: an operating lease.
Reason: in operating lease lessor give the right to use his property for a certain period to the lessee while the ownerhip is still with lessor.
Question 4 A lease where the intent is temporary use of the property by the lessee...
Which of the following is not a condition requiring the use of the capital lease reporting method? Select one: A. The lease automatically transfers ownership of the leased asset from the lessor to the lessee at the termination of the lease. B. The lease provides that the lessee can purchase the leased asset for a nominal amount (bargain purchase price) at the termination of the lease. C. The lease term is at least 75% of the remaining estimated economic useful...
Lessee Company leases heavy equipment on January 1, 2016, under a capital lease from Lessor Company with the following lease provisions: 1. The lease is non-cancelable and has a term of 10 years 2. The lease does not contain a renewal or bargain purchase option 3. The annual rentals are 27,653.77, payable at the beginning of each year. 4. Lessee agrees to pay all executory costs 5. The interest rate implicit in the lease is 12%, which is known by...
Problem 3: The following facts pertain to a non-cancelable lease agreement between Lessee and Lessor: Date of the lease 12/31/YO Annual lease payment Payment 1 due immediately) $20,472 Bargain Purchase Option (lessee expects to exercise) $4,000 Lease Term 5 years Economic Life of Leased Asset 10 years Lessor's Cost of the asset $65,000 Fair Value of the asset $91.000 Lessor's Implicit Rate & Lessee's Incremental Borrowing Rate The collectability of the lease payments by Lessor is probable. A. For the...
1. From the lessor's standpoint, which of the following statements regarding leasing is false? a. For sales-type lease agreements, the lessor earns interest in addition to profit from the transfer of the asset. b. The asset is transferred to the lessee and removed from the books of the lessor. c. The lease provides a method of indirectly making a sale. d. The risk of default is a disadvantage for the lessor. 2. Which is an advantage of leasing from a...
Problem 21-4 (Part Level Submission) The following facts pertain to a noncancelable lease agreement between Alschuler Leasing Company and Sheridan Electronics, a lessee, for a computer system October 1, 2017 Inception date 6 years Lease term Economic life of leased equipment 6 years Fair value of asset at October 1, 2017 $275,950 Residual value at end of lease term -0- Lessor's implicit rate 10 % Lessee's incremental borrowing rate 10 % Annual lease payment due at the beginning of each...
Problem 21-5 The following facts pertain to a noncancelable lease agreement between Alschuler Leasing Company and McKee Electronics, a lessee, for a computer system. Inception date Lease term Economic life of leased equipment Fair value of asset at October 1, 2017 Residual value at end of lease term Lessor's implicit rate Lessee's incremental borrowing rate Annual lease payment due at the beginning of October 1, 2017 6 years 6 years $300,383 10% 10% each year, beginning with October 1, 2017...
Question 9 (-110 On January 1, Year 1, Lessee entered into a 4-year lease that does not transfer ownership or contain a purchase option. The economic life of the leased asset, which has an alternative use, is 6 years. Also, the present value of the lease payments is 75% of the fair value of the leased asset. If no initial direct costs are incurred, what is the lessee's appropriate accounting? (1) Amortize the right-of-use asset on a straight line basis...
Problem 21-5 The following facts pertain to a noncancelable lease agreement between Sarasota Leasing Company and McKee Electronics, a lessee, for a computer system. Inception date October 1, 2017 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at October 1, 2017 $255,349 Residual value at end of lease term Lessor's implicit rate 10% Lessee's incremental borrowing rate 10% Annual lease payment due at the beginning of $53,300 each year, beginning with October 1,...
all works showed Problem 1 (25 points): On Jan 1, 2018, Lessee Corp and Lessor Company enter into an agreement whereby Lessee is going to lease a extrusion machine from Lessor for a 4 year period. The parties agree that the machine is worth $50,000 and has an expected useful life of 5 year. The contract terms call for 4 equal payments starting on January 1, 2018. Both parties agree that a financing rate of 4% is reflective of the...
P20.9 The following facts pertain to a non-cancellable lease agreement between Woodhouse Leasing Corporation and McKee Electronics Ltd., a lessee, for a computer system: Inception date October 1, 2020 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at October 1, 2020 $150,690 Residual value at end of lease term –0– Lessor’s implicit rate 8.5% Lessee’s incremental borrowing rate 8.5% Annual lease payment due at the beginning of each year, beginning October 1, 2020...