On January 1, 2017, Sheffield Company contracts to lease equipment for 5 years, agreeing to make a payment of $109,913 at the beginning of each year, starting January 1, 2017. The leased equipment is to be capitalized at $466,000. The asset is to be amortized on a double-declining-balance basis, and the obligation is to be reduced on an effective-interest basis. Sheffield’s incremental borrowing rate is 6%, and the implicit rate in the lease is 9%, which is known by Sheffield. Title to the equipment transfers to Sheffield at the end of the lease. The asset has an estimated useful life of 5 years and no residual value.
How would the value of the lease liability in part (b) change if Sheffield also agreed to pay the fixed annual insurance on the equipment of $2,000 at the same time as the rental payments? (Round answers to 0 decimal places, e.g. 5,275.) Please give an amount?
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On January 1, 2017, Sheffield Company contracts to lease
equipment for 5 years, agreeing to make...
On January 1, 2017, Sheffield Company contracts to lease equipment for 5 years, agreeing to make...
On January 1, 2017, Sheffield Company contracts to lease
equipment for 5 years, agreeing to make a payment of $109,913 at
the beginning of each year, starting January 1, 2017. The leased
equipment is to be capitalized at $466,000. The asset is to be
amortized on a double-declining-balance basis, and the obligation
is to be reduced on an effective-interest basis. Sheffield’s
incremental borrowing rate is 6%, and the implicit rate in the
lease is 9%, which is known by Sheffield....
On January 1, 2017, Sheffield Company contracts to lease equipment for 5 years, agreeing to make...
On January 1, 2017, Sheffield Company contracts to lease
equipment for 5 years, agreeing to make a payment of $109,913 at
the beginning of each year, starting January 1, 2017. The leased
equipment is to be capitalized at $466,000. The asset is to be
amortized on a double-declining-balance basis, and the obligation
is to be reduced on an effective-interest basis. Sheffield’s
incremental borrowing rate is 6%, and the implicit rate in the
lease is 9%, which is known by Sheffield....
On January 1, 2017, Whispering Company contracts to lease equipment for 5 years, agreeing to make...
On January 1, 2017, Whispering Company contracts to lease equipment for 5 years, agreeing to make a payment of $879,904 at the beginning of each year, starting January 1, 2017. The leased equipment is to be capitalized at $4,000,000. The asset is to be amortized on a double-declining-balance basis, and the obligation is to be reduced on an effective-interest basis. Whispering’s incremental borrowing rate is 6%, and the implicit rate in the lease is 5%, which is known by Whispering....
On January 1, 2017, Sheffield Company contracts to lease equipment for 5 years, agreeing to make...
On January 1, 2017, Sheffield Company contracts to lease
equipment for 5 years, agreeing to make a payment of $109,913 at
the beginning of each year, starting January 1, 2017. The leased
equipment is to be capitalized at $466,000. The asset is to be
amortized on a double-declining-balance basis, and the obligation
is to be reduced on an effective-interest basis. Sheffield’s
incremental borrowing rate is 6%, and the implicit rate in the
lease is 9%, which is known by Sheffield....
On January 1, 2017, Bramble Company contracts to lease equipment for 5 years, agreeing to make a payment of $879,904 at...
On January 1, 2017, Bramble Company contracts to lease equipment
for 5 years, agreeing to make a payment of $879,904 at the
beginning of each year, starting January 1, 2017. The leased
equipment is to be capitalized at $4,000,000. The asset is to be
amortized on a double-declining-balance basis, and the obligation
is to be reduced on an effective-interest basis. Bramble’s
incremental borrowing rate is 6%, and the implicit rate in the
lease is 5%, which is known by Bramble....
Problem 21A-2 b-f (Part Level Submission) On January 1, 2017, Bridgeport Company contracts to lease equipment...
Problem 21A-2 b-f (Part Level Submission) On January 1, 2017, Bridgeport Company contracts to lease equipment for 5 years, agreeing to make a payment of $149,645 at the beginning of each year, starting January 1, 2017. The leased equipment is to be capitalized at $624,000. The asset is to be amortized on a double-declining-balance basis, and the obligation is to be reduced on an effective-interest basis. Bridgeport's incremental borrowing rate is 6%, and the implicit rate in the lease is...
Problem 21A-2 b-f (Part Level Submission) On January 1, 2017, Bridgeport Company contracts to lease equipment for...
Problem 21A-2 b-f (Part Level Submission) On January 1, 2017, Bridgeport Company contracts to lease equipment for 5 years, agreeing to make a payment of $149,645 at the beginning of each year, starting January 1, 2017. The leased equipment is to be capitalized at $624,000. The asset is to be amortized on a double-declining-balance basis, and the obligation is to be reduced on an effective interest basis. Bridgeport's incremental borrowing rate is 6%, and the implicit by Bridgeport. Title to...
On January 1,2017, Cage Company contracts to lease equipment for 5 years, agreeing to make a paym...
On January 1,2017, Cage Company contracts to lease equipment for 5 years, agreeing to make a payment of $120,987 at the beginning of each year, starting January 1, 2017. The leased equipment is to be capitalized at $550,000. The asset is to be amortized on a double-declining balance basis, and the obligation is to be reduced on an effective-interest basis. Cage's incremental borrowing rate is 6%, and the implicit rate in the lease is 5%, which is known by Cage....
P21-2 (L02,4) (Lessee Entries and Balance Sheet Presentation, Finance Lease) On January 1, 2017, Cage Company...
P21-2 (L02,4) (Lessee Entries and Balance Sheet Presentation, Finance Lease) On January 1, 2017, Cage Company con- tracts to lease equipment for 5 years, agreeing to make a payment of $120,987 at the beginning of each year, starting January 1, 2017. The leased equipment is to be capitalized at $550,000. The asset is to be amortized on a double-declining-balance basis, and the obligation is to be reduced on an effective-interest basis. Cage's incremental borrowing rate is 6%, and the implicit...
LeBron James (LBJ) Corporation agrees on January 1, 2017, to lease equipment from Cavaliers, Inc. for...
LeBron James (LBJ) Corporation agrees on January 1, 2017, to lease equipment from Cavaliers, Inc. for 3 years. The lease calls for annual lease payments of $17,000 at the beginning of each year. The lease does not transfer ownership, nor does it contain a bargain purchase option, and is not a specialized asset. In addition, the useful life of the equipment is 10 years, and the present value of the lease payments is less than 90% of the fair value...
On January 1, 2017, Sheffield Company contracts to lease
equipment for 5 years, agreeing to make a payment of $109,913 at
the beginning of each year, starting January 1, 2017. The leased
equipment is to be capitalized at $466,000. The asset is to be
amortized on a double-declining-balance basis, and the obligation
is to be reduced on an effective-interest basis. Sheffield’s
incremental borrowing rate is 6%, and the implicit rate in the
lease is 9%, which is known by Sheffield....
On January 1, 2017, Sheffield Company contracts to lease
equipment for 5 years, agreeing to make a payment of $109,913 at
the beginning of each year, starting January 1, 2017. The leased
equipment is to be capitalized at $466,000. The asset is to be
amortized on a double-declining-balance basis, and the obligation
is to be reduced on an effective-interest basis. Sheffield’s
incremental borrowing rate is 6%, and the implicit rate in the
lease is 9%, which is known by Sheffield....
On January 1, 2017, Sheffield Company contracts to lease
equipment for 5 years, agreeing to make a payment of $109,913 at
the beginning of each year, starting January 1, 2017. The leased
equipment is to be capitalized at $466,000. The asset is to be
amortized on a double-declining-balance basis, and the obligation
is to be reduced on an effective-interest basis. Sheffield’s
incremental borrowing rate is 6%, and the implicit rate in the
lease is 9%, which is known by Sheffield....
On January 1, 2017, Bramble Company contracts to lease equipment
for 5 years, agreeing to make a payment of $879,904 at the
beginning of each year, starting January 1, 2017. The leased
equipment is to be capitalized at $4,000,000. The asset is to be
amortized on a double-declining-balance basis, and the obligation
is to be reduced on an effective-interest basis. Bramble’s
incremental borrowing rate is 6%, and the implicit rate in the
lease is 5%, which is known by Bramble....
Problem 21A-2 b-f (Part Level Submission) On January 1, 2017, Bridgeport Company contracts to lease equipment for 5 years, agreeing to make a payment of $149,645 at the beginning of each year, starting January 1, 2017. The leased equipment is to be capitalized at $624,000. The asset is to be amortized on a double-declining-balance basis, and the obligation is to be reduced on an effective-interest basis. Bridgeport's incremental borrowing rate is 6%, and the implicit rate in the lease is...
Problem 21A-2 b-f (Part Level Submission) On January 1, 2017, Bridgeport Company contracts to lease equipment for 5 years, agreeing to make a payment of $149,645 at the beginning of each year, starting January 1, 2017. The leased equipment is to be capitalized at $624,000. The asset is to be amortized on a double-declining-balance basis, and the obligation is to be reduced on an effective interest basis. Bridgeport's incremental borrowing rate is 6%, and the implicit by Bridgeport. Title to...
On January 1,2017, Cage Company contracts to lease equipment for 5 years, agreeing to make a payment of $120,987 at the beginning of each year, starting January 1, 2017. The leased equipment is to be capitalized at $550,000. The asset is to be amortized on a double-declining balance basis, and the obligation is to be reduced on an effective-interest basis. Cage's incremental borrowing rate is 6%, and the implicit rate in the lease is 5%, which is known by Cage....
P21-2 (L02,4) (Lessee Entries and Balance Sheet Presentation, Finance Lease) On January 1, 2017, Cage Company con- tracts to lease equipment for 5 years, agreeing to make a payment of $120,987 at the beginning of each year, starting January 1, 2017. The leased equipment is to be capitalized at $550,000. The asset is to be amortized on a double-declining-balance basis, and the obligation is to be reduced on an effective-interest basis. Cage's incremental borrowing rate is 6%, and the implicit...
LeBron James (LBJ) Corporation agrees on January 1, 2017, to lease equipment from Cavaliers, Inc. for 3 years. The lease calls for annual lease payments of $17,000 at the beginning of each year. The lease does not transfer ownership, nor does it contain a bargain purchase option, and is not a specialized asset. In addition, the useful life of the equipment is 10 years, and the present value of the lease payments is less than 90% of the fair value...
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