Homework Answers
The residual value guaranteed by Reagan to the lessor is $31,900 which in the year 2026
The $79,700 is the annual lease payments paid at the beginning of each year and in 2026 the residual value guaranteed by the lessor to lessee is $31,900
This guaranteed residual value is discounted to the present value by the lessor and recorded in books.
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On December 31, 2020, Reagan Inc. signed a lease with Silver Leasing Co. for some equipment...
On December 31, 2020, Reagan Inc. signed a lease with Silver Leasing Co. for some equipment...
On December 31, 2020, Reagan Inc. signed a lease with Silver Leasing Co. for some equipment having a seven-year useful life. The lease payments are made by Reagan annually, beginning at signing date. Title does not transfer to the lessee, so the equipment will be returned to the lessor on December 31, 2026. There is no purchase option, and Reagan guarantees a residual value to the lessor on termination of the lease. Reagan's lease amortization schedule appears below: Dec. 31...
On December 31, 2020, Reagan Inc. signed a lease with Silver Leasing Co. for some equipment...
On December 31, 2020, Reagan Inc. signed a lease with Silver Leasing Co. for some equipment having a seven-year useful life. The lease payments are made by Reagan annually, beginning at signing date. Title does not transfer to the lessee, so the equipment will be returned to the lessor on December 31, 2026. There is no purchase option, and Reagan guarantees a residual value to the lessor on termination of the lease. Reagan's lease amortization schedule appears below: Decrease in...
Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Skysong Company....
Laura Leasing Company signs an agreement on January 1, 2020, to
lease equipment to Skysong Company. The following information
relates to this agreement.
1.
The term of the non-cancelable lease is 3 years with no renewal
option. The equipment has an estimated economic life of 5
years.
2.
The fair value of the asset at January 1, 2020, is
$77,000.
3.
The asset will revert to the lessor at the end of the lease
term, at which time the asset...
Sheridan Leasing Company agrees to lease equipment to Skysong Corporation on January 1, 2020. The following...
Sheridan Leasing Company agrees to lease equipment to Skysong Corporation on January 1, 2020. 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 $489,000, and the fair value of the asset on January 1, 2020, is $699,000. 3. At the end of the lease term, the asset reverts to the...
Rhone-Metro Industries manufactures equipment that is sold or leased. On December 31, 2021, Rhone-Metro leased equipment...
Rhone-Metro Industries manufactures equipment that is sold or
leased. On December 31, 2021, Rhone-Metro leased equipment to
Western Soya Co. for a four-year period ending December 31, 2025,
at which time possession of the leased asset will revert back to
Rhone-Metro. The equipment cost $250,000 to manufacture and has an
expected useful life of six years. Its normal sales price is
$294,546. The expected residual value of $17,000 at December 31,
2025, is not guaranteed. Equal payments under the lease...
Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Shamrock Company....
Laura Leasing Company signs an agreement on January 1,
2020, to lease equipment to Shamrock Company. The following
information relates to this agreement.
1.The term of the non-cancelable lease is 3 years with
no renewal option. The equipment has an estimated economic life of
5 years.
2.The fair value of the asset at January 1, 2020, is
$55,000.
3.The asset will revert to the lessor at the end of
the lease term, at which time the asset is expected to...
Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Blue Company. The following informat...
Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Blue Company. The following information relates to this agreement. 1. The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. 2. The fair value of the asset at January 1, 2020, is $78,000. 3. The asset will revert to the lessor at the end of the lease term, at which time the asset...
Carla Leasing Company agrees to lease equipment to Sarasota Corporation on January 1, 2020. The term...
Carla Leasing Company agrees to lease equipment to Sarasota
Corporation on January 1, 2020.
The term of the lease is 7 years with no renewal option, and the
machinery has an estimated economic life of 9 years. The cost of
the machinery is $541,000, and the fair value of the asset on
January 1, 2020, is $760,000. At the end of the lease term, the
asset reverts to the lessor and has a guaranteed residual value of
$45,000. Sarasota estimates...
Metlock Leasing Company signs an agreement on January 1, 2020, to lease equipment to Cole Company....
Metlock Leasing Company signs an agreement on January 1, 2020,
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 estimated economic life of 6
years.
2.
The cost of the asset to the lessor is $240,000. The fair value
of the asset at January 1, 2020, is $240,000.
3.
The asset will revert to the lessor at the...
Part VI: Lessee and Lessor on January 1, 2019 enter into a 4-year non-cancelable lease, with...
Part VI: Lessee and Lessor on January 1, 2019 enter into a 4-year non-cancelable lease, with two renewal options of one year each, for equipment having a useful life of 12 years. Lessee's incremental borrowing rate is 8% while Lessor's implicit rate is 5% and known to Lessee. The Lessee uses the straight-line method of depreciation. The lease contains the following provisions: 1. Annual rental payments of $20,000 payable at the beginning of each year, starting January 1, 2019. 2....
On December 31, 2020, Reagan Inc. signed a lease with Silver Leasing Co. for some equipment having a seven-year useful life. The lease payments are made by Reagan annually, beginning at signing date. Title does not transfer to the lessee, so the equipment will be returned to the lessor on December 31, 2026. There is no purchase option, and Reagan guarantees a residual value to the lessor on termination of the lease. Reagan's lease amortization schedule appears below: Decrease in...
Laura Leasing Company signs an agreement on January 1, 2020, to
lease equipment to Skysong Company. The following information
relates to this agreement.
1.
The term of the non-cancelable lease is 3 years with no renewal
option. The equipment has an estimated economic life of 5
years.
2.
The fair value of the asset at January 1, 2020, is
$77,000.
3.
The asset will revert to the lessor at the end of the lease
term, at which time the asset...
Rhone-Metro Industries manufactures equipment that is sold or
leased. On December 31, 2021, Rhone-Metro leased equipment to
Western Soya Co. for a four-year period ending December 31, 2025,
at which time possession of the leased asset will revert back to
Rhone-Metro. The equipment cost $250,000 to manufacture and has an
expected useful life of six years. Its normal sales price is
$294,546. The expected residual value of $17,000 at December 31,
2025, is not guaranteed. Equal payments under the lease...
Laura Leasing Company signs an agreement on January 1,
2020, to lease equipment to Shamrock Company. The following
information relates to this agreement.
1.The term of the non-cancelable lease is 3 years with
no renewal option. The equipment has an estimated economic life of
5 years.
2.The fair value of the asset at January 1, 2020, is
$55,000.
3.The asset will revert to the lessor at the end of
the lease term, at which time the asset is expected to...
Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Blue Company. The following information relates to this agreement. 1. The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. 2. The fair value of the asset at January 1, 2020, is $78,000. 3. The asset will revert to the lessor at the end of the lease term, at which time the asset...
Carla Leasing Company agrees to lease equipment to Sarasota
Corporation on January 1, 2020.
The term of the lease is 7 years with no renewal option, and the
machinery has an estimated economic life of 9 years. The cost of
the machinery is $541,000, and the fair value of the asset on
January 1, 2020, is $760,000. At the end of the lease term, the
asset reverts to the lessor and has a guaranteed residual value of
$45,000. Sarasota estimates...
Metlock Leasing Company signs an agreement on January 1, 2020,
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 estimated economic life of 6
years.
2.
The cost of the asset to the lessor is $240,000. The fair value
of the asset at January 1, 2020, is $240,000.
3.
The asset will revert to the lessor at the...
Part VI: Lessee and Lessor on January 1, 2019 enter into a 4-year non-cancelable lease, with two renewal options of one year each, for equipment having a useful life of 12 years. Lessee's incremental borrowing rate is 8% while Lessor's implicit rate is 5% and known to Lessee. The Lessee uses the straight-line method of depreciation. The lease contains the following provisions: 1. Annual rental payments of $20,000 payable at the beginning of each year, starting January 1, 2019. 2....
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