Oriole Leasing Corporation, which uses IFRS 16, signs a lease
agreement on January 1, 2020, to lease electronic equipment to Wai
Corporation, which also uses IFRS 16. The term of the
non-cancellable lease is two years and payments are required at the
end of each year. The following information relates to this
agreement.
1. | Wai Corporation has the option to purchase the equipment for $12,400 upon the termination of the lease and this option is reasonably certain to be exercised. | |
2. | The equipment has a cost and fair value of $170,000 to Oriole Leasing Corporation. The useful economic life is two years, with a residual value of $12,400. | |
3. | Wai Corporation is required to pay $5,700 each year to the lessor for insurance costs. | |
4. | Oriole Leasing Corporation wants to earn a return of 9% on its investment. | |
5. | Collectibility of the payments is reasonably predictable, and there are no important uncertainties surrounding the costs that have not yet been incurred by the lessor. |
Using time value of money tables, a financial calculator, or Excel functions, calculate the lease payment that Oriole Leasing would require from Wai Corporation. (Hint: You may find the ROUND formula helpful for rounding in Excel.)
Put Journal entries too.
Oriole Leasing Corporation, which uses IFRS 16, signs a lease agreement on January 1, 2020, to...
Oriole Leasing Corporation, which uses IFRS 16, signs a lease agreement on January 1, 2020, to lease electronic equipment to Wai Corporation, which also uses IFRS 16. The term of the non-cancellable lease is two years and payments are required at the end of each year. The following information relates to this agreement. 1. Wai Corporation has the option to purchase the equipment for $12,400 upon the termination of the lease and this option is reasonably certain to be exercised....
Exercise 20-11 Oriole Leasing Corporation, which uses IFRS 16, signs a lease agreement on January 1, 2017 to lease electronic equipment to Wai Corporation, which also uses IFRS 16. The term of the non-cancellable lease is two years and payments are required at the end of each year. The following information relates to this agreement. 1. Wai Corporation has the option to purchase the equipment for $12,800 upon the termination of the lease and this option is reasonably certain to...
Concord Leasing Company signs a lease agreement on January 1,
2017, to lease electronic equipment to Marigold Company. The term
of the noncancelable lease is 2 years, and payments are required at
the end of each year. The following information relates to this
agreement:
1.
Marigold Company has the option to purchase the equipment for
$16,000 upon termination of the lease.
2.
The equipment has a cost and fair value of $157,000 to Concord
Leasing Company. The useful economic life...
Morgan Leasing Company signs an agreement on January 1, 2014, to lease equipment to Cole Company. The following information relates to this agreement. 1. The term of the noncancelable 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 $245,000. The fair value of the asset on January 1, 2014, is $245,000. 3. The asset will revert to the lessor at the...
Bramble 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 noncancelable 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 $268,000. The fair value of the asset at January 1, 2017, is $268,000. 3. The asset will revert to the lessor at the...
Exercise 21-4 Pronghorn Leasing Company signs a lease agreement on January 1, 2017, to lease electronic equipment to Stellar Company. The term of the noncancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement: 1. Stellar Company has the option to purchase the equipment for $16,100 upon termination of the lease. 2. The equipment has a cost and fair value of $164,000 to Pronghorn Leasing Company. The useful...
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Castle Leasing Company signs a lease agreement on January 1, 2020, to lease electronic equipment to Jan Way 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. Jan Way has the option to purchase the equipment for $16,000 upon termination of the lease. It is not reasonably certain that Jan Way will exercise this option. 2. The equipment has a cost...
Bramble 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 noncancelable 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 $268,000. The fair value of the asset at January 1, 2017, is $268,000. 3. The asset will revert to the lessor at the...