Homework Answers
In order to ensure that they successfully earn the Full market value of the leased asset how should a lessor calculate the amount of its lease payments :
To ensure "They should use the market value of the leased the PV of all the lease payments"
Because while calculatuing PV of all the lease payments it should basically cover the market value of the asset so that lessor atleast recover the market value of leased asset
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What is a Bargain Purchase Option (BPO) for a lease? The right to buy the asset...
Question 2 In order to ensure that they successfully earn the full market value of a...
Question 2 In order to ensure that they successfully earn the full market value of a leased asset, how should the LESSOR calculate the amount of the lease payment? They should use the market value less the estimated residual value as the PV of the lease payments. They should use the historical value less the present value of the bargain purchase option as the PV of the lease payments. They should use the market value less the present value of...
Which of the following is not a sufficient criterion for a lessor to classify a lease...
Which of the following is not a sufficient criterion for a lessor to classify a lease as a sales-type lease? Multiple Choice The lease transfers Ownership of the leased asset to the lessee at the end of the lease term. O The lessee has the option of acquiring the asset during or at the end of the lease term at a bargain price. O The present value of the lease payments is greater than the carrying value of the leased...
Question 21 Alessee with a finance lease containing a bargain purchase option should amortize the leased...
Question 21 Alessee with a finance lease containing a bargain purchase option should amortize the leased asset over the life of the asset or the term of the lease. whichever is shorter L ife of the asset or the term of the lease. whichever is longer term of the lease. asset's remaining economic life.
Executory costs include a) maintenance, interest and property taxes. b) interest, property taxes and depreciation. c)...
Executory costs include a) maintenance, interest and property taxes. b) interest, property taxes and depreciation. c) insurance, maintenance and property taxes. d) maintenance, insurance and income taxes. Which of the following is a correct statement regarding one of the ASPE capitalization criteria? a) The lease transfers ownership of the property to the lessor. b) The lease must contain a bargain purchase option. c) The lease term is 75% or more of the leased property’s estimated economic life. d) The fair...
Leased Asset Hopper Corporation signed a ten-year capital lease or finance lease on January 1, 2017. The lease requires...
Leased Asset Hopper Corporation signed a ten-year capital lease or finance lease on January 1, 2017. The lease requires annual payments of $8,000 every December 31. Use the appropriate present value table: PV of $1, PV of Annuity of $1 Required: 1. Assuming an interest rate of 10%, calculate the present value of the minimum lease payments. Round your answer to the nearest whole dollar. 2. Hopper should report a long term liability to accompany its capitalized leased asset equal...
Taylor Company leased an asset from Lease Corp. using an operating lease for equipment with a...
Taylor Company leased an asset from Lease Corp. using an operating lease for equipment with a useful life of seven years. The initial lease term was for three years. After two years, Taylor Company and Lease Corp. agree to extend the lease term by four years, and to change the amount of lease payments. The additional four years were not originally an option. The increase in present value of lease payments for Taylor is $200,000. The present value of the...
Compare the way a bargain purchase option and a residual value are treated by the lessee...
Compare the way a bargain purchase option and a residual value are treated by the lessee when determining minimum lease payments.
Brief Exercise 15-13 Purchase option; lessor; sales-type lease [LO15-2, 15-3, 15-6] Ace Leasing acquires equipment and...
Brief Exercise 15-13 Purchase option; lessor; sales-type lease [LO15-2, 15-3, 15-6] Ace Leasing acquires equipment and leases it to customers under long-term sales-type leases. Ace earns interest under these arrangements at a 5% annual rate. Ace leased a machine it purchased for $710,000 under an arrangement that specified annual payments beginning at the commencement of the lease for five years. The lessee had the option to purchase the machine at the end of the lease term for $100,000 when it...
E21.10 (LO 2,4) (Lessee Entries with Bargain Purchase Option) The following facts pertain to a non-cancelable...
E21.10 (LO 2,4) (Lessee Entries with Bargain Purchase Option) The following facts pertain to a non-cancelable lease agreement between Mooney Leasing Company and Rode Company, a lessee. May 1, 2020 Commencement date Annual lease payment due at the beginning of each year, beginning with May 1, 2020 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, 2020 Lessor's implicit rate Lessee's incremental borrowing rate...
Which of the following is not a sufficient criterion for a lessor to classify a lease as a sales-type lease? Multiple Choice The lease transfers Ownership of the leased asset to the lessee at the end of the lease term. O The lessee has the option of acquiring the asset during or at the end of the lease term at a bargain price. O The present value of the lease payments is greater than the carrying value of the leased...
Question 21 Alessee with a finance lease containing a bargain purchase option should amortize the leased asset over the life of the asset or the term of the lease. whichever is shorter L ife of the asset or the term of the lease. whichever is longer term of the lease. asset's remaining economic life.
Leased Asset Hopper Corporation signed a ten-year capital lease or finance lease on January 1, 2017. The lease requires annual payments of $8,000 every December 31. Use the appropriate present value table: PV of $1, PV of Annuity of $1 Required: 1. Assuming an interest rate of 10%, calculate the present value of the minimum lease payments. Round your answer to the nearest whole dollar. 2. Hopper should report a long term liability to accompany its capitalized leased asset equal...
E21.10 (LO 2,4) (Lessee Entries with Bargain Purchase Option) The following facts pertain to a non-cancelable lease agreement between Mooney Leasing Company and Rode Company, a lessee. May 1, 2020 Commencement date Annual lease payment due at the beginning of each year, beginning with May 1, 2020 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, 2020 Lessor's implicit rate Lessee's incremental borrowing rate...
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