Lease Liability is the Present Value of minimum lease rental and guranteed residual value.
ie, 13500* PV @ 0 year + 2 years @ 6% => 13500*(1+1.833) => 38250.80
Date | annual payment | Interest on lease liability | Reduction of lease liability | Lease liability |
01-jan-17 | 38250.80 | |||
1-jan-17 | 13500 | 0 | 13500 | 24750.80 |
1-jan-18 | 13500 | 1485.05 | 12014.95 | 12735.85 |
1-jan-19 | 13500 | 764.15 | 12735.85 | 0 |
Please comment in case of any query regarding the solution.
Problem 21A-16 b-e (Part Level Submission) Blue Corporation entered into a lease agreement on January 1,...
Sheffield Corporation entered into a lease agreement on January 1, 2017, to provide Pharoah Company with a piece of machinery. The terms of the lease agreement were as follows. 1. The lease is to be for 3 years with rental payments of $13,700 to be made at the beginning of each year. 2. The machinery has a fair value of $65,000, a book value (depreciable base for the lessor) of $40,000, and an economic life of 8 years. 3. At...
Blue Corporation entered into a lease agreement on January 1,2020, to provide Crane Company with a piece of machinery. The terms of the lease agreement were as follows.1. The lease is to be for 3 years with rental payments of \(\$ 15,990\) to be made at the beginning of each year.2. The machinery has a fair value of \(\$ 63,000\), a book value of \(\$ 40,000\), and an economic life of 8 years.At the end of the lease term, both...
Blue Corporation entered into a lease agreement on January 1, 2020, to provide Crane Company with a piece of machinery. The terms of the lease agreement were as follows. 1. The lease is to be for 3 years with rental payments of $15,180 to be made at the beginning of each year. 2. The machinery has a fair value of $64,000, a book value of $40,000, and an economic life of 8 years. 3. At the end of the lease...
Exercise 21A-10 a-d (Part Level Submission) The following facts pertain to a non-cancelable lease agreement between Crane Leasing Company and Larkspur Company, a lessee. May 1, 2017 Commencement date Annual lease payment due at the beginning of each year, beginning with May 1, 2017 Bargain purchase option price at end of lease term Lease term Economic life of leased equipment Lessor's cost Fair value of asset at May 1, 2017 Lessor's implicit rate Lessee's incremental borrowing rate $15,138.16 $4,000 5...
Exercise 21A-10 a-d (Part Level Submission) The following facts pertain to a non-cancelable lease agreement between Crane Leasing Company and Larkspur Company, a lessee. May 1, 2017 Commencement date Annual lease payment due at the beginning of each year, beginning with May 1, 2017 Bargain purchase option price at end of lease term Lease term Economic life of leased equipment Lessor's cost Fair value of asset at May 1, 2017 Lessor's implicit rate Lessee's incremental borrowing rate $15,138.16 $4,000 5...
Ayayai Corporation entered into a lease agreement on January 1, 2020, to provide Blossom Company with a piece of machinery. The terms of the lease agreement were as follows. 1. The lease is to be for 3 years with rental payments of $13,936 to be made at the beginning of each year. 2. The machinery has a fair value of $58,000, a book value of $40,000, and an economic life of 8 years. 3. At the end of the lease...
Problem 21A-6 b-f (Part Level Submission) Pina Leasing Company agrees to lease equipment to Grouper Corporation on January 1, 2017. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. 2. The cost of the machinery is $518,000, and the fair value of the asset on January 1, 2017, is $648,000. 3. At the end of the lease...
Problem 21A-1 a-c (Part Level Submission) The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Sweet Company, a lessee. Commencement date January 1, 2017 Annual lease payment due at the beginning of each year, beginning with January 1, 2017 $104,738 Residual value of equipment at end of lease term, guaranteed by the lessee $54,000 Expected residual value of equipment at end of lease term $49,000 Lease term 6 years Economic...
Exercise 21A-6 a-b (Part Level Submission) Shamrock Leasing Company signs a lease agreement on January 1, 2017, to lease electronic equipment to Pharoah Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement: 1. 2. 3. 4. Pharoah has the option to purchase the equipment for $23,000 upon termination of the lease. It is not reasonably certain that Pharoah will exercise this option....
Exercise 21A-5 a-c Tamarisk Leasing Company signs an agreement on January 1, 2017, to lease equipment to Cole Company. The following information relates to this agreement 1. The term of the non-cancelable lease is 6 years with no renewal option. The equipment has an 2. The cost of the asset to the lessor is $291,000. The fair value of the asset at January 1, 2017, is 3. The asset will revert to the lessor at the end of the lease...