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Solution:
Annual lease payment = Fair value of equipment / Cumulative PV factor at 10% for 3 periods
= $87,000 / 2.48685 = $34,984
Date | Rent receipts/ Payments | Interest revenue / Expense | Reduction of Principal | Receivable / Liability |
1-Jan-17 | $87,000 | |||
31-Dec-17 | $34,984 | $8,700 | $26,284 | $60,716 |
31-Dec-18 | $34,984 | $6,072 | $28,912 | $31,804 |
31-Dec-19 | $34,984 | $3,180 | $31,804 | $0 |
Exercise 21-5 Waterway Leasing Company leases a new machine that has a cost and fair value...
Exercise 21-5
Waterway Leasing Company leases a new machine that has a cost and
fair value of $87,000 to Sharrer Corporation on a 3-year
noncancelable contract. Sharrer Corporation agrees to assume all
risks of normal ownership including such costs as insurance, taxes,
and maintenance. The machine has a 3-year useful life and no
residual value. The lease was signed on January 1, 2017. Waterway
Leasing Company expects to earn a 10% return on its investment. The
annual rentals are payable...
Exercise 21-5 Your answer is partially correct. Try again. Coronado Leasing Company leases a new machine that has a cost and fair value of $72,000 to Sharrer Corporation on a 3-year noncancelable contract. Sharrer Corporation agrees to assume all risks of normal ownership including such costs as insurance, taxes, and maintenance. The machine has a 3-year useful life and no residual value. The lease was signed on January 1, 2017. Coronado Leasing Company expects to earn a 9% return on...
Crane Leasing Company leases a new machine to Sharrer Corporation. The machine has a cost of $65,000 and fair value of $85,500. Under the 3-year, non-cancelable contract, Sharrer will receive title to the machine at the end of the lease. The machine has a 3-year useful life and no residual value. The lease was signed on January 1, 2020. Crane expects to earn an 8% return on its investment, and this implicit rate is known by Sharrer. The annual rentals...
Crane Leasing Company leases a new machine to Sharrer Corporation. The machine has a cost of $65,000 and fair value of $91,000. Under the 3-year, non-cancelable contract, Sharrer will receive title to the machine at the end of the lease. The machine has a 3-year useful life and no residual value. The lease was signed on January 1 2017, Crane expects to eam an 8% return on its investment, and this ımplicit rate is known by Sharrer. The annual rentals...
Exercise 21A-7 b-e Carla Vista Leasing Company leases a new machine to Sharrer Corporation. The machine has a cost of $65,000 and fair value of $94,500. Under the 3-year, non-cancelable contract, Sharrer will receive title to the machine at the end of the lease. The machine has a 3-year useful life and no residual value. The lease was signed on January 1, 2017. Carla Vista expects to earn an 8% return on its investment, and this implicit rate is known...
Carla Vista Leasing Company leases a new machine to Sharrer Corporation. The machine has a cost of $65,000 and fair value of $89,000. Under the 3-year, non-cancelable contract, Sharrer will receive title to the machine at the end of the lease. The machine has a 3-year useful life and no residual value. The lease was signed on January 1, 2020. Carla Vista expects to earn an 8% return on its investment, and this implicit rate is known by Sharrer. The...
Blossom Leasing Company leases a new machine to Sharrer
Corporation. The machine has a cost of $65,000 and fair value of
$90,500. Under the 3-year, non-cancelable contract, Sharrer will
receive title to the machine at the end of the lease. The machine
has a 3-year useful life and no residual value. The lease was
signed on January 1, 2020. Blossom expects to earn an 8% return on
its investment, and this implicit rate is known by Sharrer. The
annual rentals...
Exercise 21-07 b-e Carla Vista Leasing Company leases a new machine to Sharrer Corporation. The machine has a cost of $65,000 and fair value of $94,500. Under the 3-year, non-cancelable contract, Sharrer will receive title to the machine at the end of the lease. The machine has a 3-year useful life and no residual value. The lease was signed on January 1, 2020. Carla Vista expects to earn an 8% return on its investment, and this implicit rate is known...
Sheridan Leasing Company leases a new machine to Sharrer
Corporation. The machine has a cost of $65,000 and fair value of
$88,000. Under the 3-year, non-cancelable contract, Sharrer will
receive title to the machine at the end of the lease. The machine
has a 3-year useful life and no residual value. The lease was
signed on January 1, 2017. Sheridan expects to earn an 8% return on
its investment, and this implicit rate is known by Sharrer. The
annual rentals...
Exercise 21-1 (Part Level Submission) On January 1, 2017, Waterway Corporation signed a 5-year noncancelable lease for a machine. The terms of the lease called for Waterway to make annual payments of $7,909 at the beginning of each year, starting January , 2017. The machine has an estimated useful life of 6 years and a $4,500 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Waterway uses the straight-line method of depreciation...