Red Co. recorded a right-of-use asset of $125,000 in a 10-year finance lease. Payments of $20,343...
Red Co. recorded a right-of-use asset of $125,000 in a 10-year finance lease. Payments of $20,343 are made annually at the end of each year. The interest rate charged by the lessor and known by Red was 10%. The balance in the lease payable after two years will be: (Round your final answer to the nearest whole dollar.)
Multiple Choice
-
$151,250.
-
$145,377.
-
$100,000.
-
$108,530.
Homework Answers
| Year | Beg. bal | Installment | Interest *beg bal * 10%) | Principal | End bal |
| 1 | $125,000 | $20,343 | $12,500 | $7,843 | $117,157 |
| 2 | $117,157 | $20,343 | $11,715.70 | $8,627.30 | $108,529.70 |
The balance in the lease payable after two years = $108,530 (rounded off to nearest whole number)
Option '4' is correct
Add Answer to:
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1
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beginning of each year. The lessee is aware of the lessor’s
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FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from
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3
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11
21
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Lessor's rate of return (known by lessee)
10%
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ach of the three independent situations below describes a
finance lease in which annual lease payments are payable at the
end of each year. The lessee is aware of the lessor’s
implicit rate of return. (FV of $1, PV of $1, FVA of $1, PVA of $1,
FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from
the tables provided.)
Situation
1
2
3
Lease term (years)
8
15
4
Lessor's rate of return (known by lessee)
11%
9%...
A finance lease agreement calls for quarterly lease payments of $5,519 over a 10-year lease term, with the first payment on July 1, the beginning of the lease. The annual interest rate is 8%. Both the present value of the lease payments and the cost of the asset to the lessor are $154,000. Required: a. Prepare a partial amortization table up to the October 1 payment. b. What would be the amount of interest expense (revenue) the lessee (lessor) would...
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