a. Is the lease an operating lease or a financing lease?
It is an operating lease because it does not meet any of the four criteria required for a financing lease.
b. What will be the lease expense shown on the income statement at the end of year 1?
The lease expense shown on the income statement at the end of year 1 is $34,400.
c. What will be the interest expense shown on the income statement at the end of year 1?
Because it is an operating lease no interest expense will be shown on the income statement at the end of year 1. Therefore, the answer is $0.
d. What will be the amortization expense shown on the income statement at the end of year 1?
Because it is an operating lease no amortizaton expense will be shown on the income statement at the end of year 1. Therefore, the answer is $0.
Krawczek Company will enter into a lease agreement with Heavy Equipment Co. where Krawczek will make...
Krawczek Company will enter into a lease agreement with Heavy Equipment Co. where Krawczek will make lease payments over the next five years. The lease is cancelable and requires equal annual payments of $36,000 per year beginning on January 1 of the first year. The last payment will be January 1 of year 5, and Krawczek will continue to use the asset until December 31 of that year. Other important information includes the following: • The fair value of the...
Krawczek Company will enter into a lease agreement with Heavy Equipment Co. where Krawczek will make lease payments over the next five years. The lease is cancelable and requires equal annual payments of $30,400 per year beginning on January 1 of the first year. The last payment will be January 1 of year 5, and Krawczek will continue to use the asset until December 31 of that year. Other important information includes the following: . The fair value of the...
Krawczek Company will enter into a lease agreement with Heavy Equipment Co. where Krawczek will make lease payments over the next five years. The lease is cancelable and requires equal annual payments of $32,800 per year beginning on January 1 of the first year. The last payment will be January 1 of year 5, and Krawczek will continue to use the asset until December 31 of that year. Other important information includes the following: The fair value of the equipment...
Krawczek Company will enter into a lease agreement with Heavy Equipment Co. where Krawczek will make lease payments over the next five years. The lease is cancelable and requires equal annual payments of $24,800 per year beginning on January 1 of the first year. The last payment will be January 1 of year 5, and Krawczek will continue to use the asset until December 31 of that year. Other important information includes the following: The fair value of the equipment...
Krawczek Company will enter into a lease agreement with Heavy Equipment Co. where Krawczek will make lease payments over the next five years. The lease is cancelable and requires equal annual payments of $24,800 per year beginning on January 1 of the first year. The last payment will be January 1 of year 5, and Krawczek will continue to use the asset until December 31 of that year. Other important information includes the following: The fair value of the equipment...
The Harris Company is the lessee on a four-year lease with the following payments at the end of each year: Year 1: Year 2: Year 3: Year 4: $19,500 $24,500 $29,500 $ 34,500 An appropriate discount rate is 7 percentage, yielding a present value of $90,024. a-1. If the lease is an operating lease, what will be the initial value of the right-of-use asset? Initial value of the right-of-use asset a-2. If the lease is an operating lease, what will...
The Harris Company is the lessee on a four-year lease with the following payments at the end of each year: Year 1: Year 2: Year 3: Year 4: $18,000 $23,000 $28,000 $33,000 An appropriate discount rate is 7 percentage, yielding a present value of $84,943. a-1. If the lease is an operating lease, what will be the initial value of the right-of-use asset? Initial value of the right-of-use asset a-2. If the lease is an operating lease, what will be...
The Harris Company is the lessee on a four-year lease with the following payments at the end of each year Year 1: Year 2 Year 3: Year 4: $18,000 $23,000 $28,000 $33,000 An appropriate discount rate is 7 percentage, yielding a present value of $84,943. 1-1. If the lease is an operating lease, what will be the initial value of the right-of-use asset? Initial value of the right-of-use asset a-2. If the lease is an operating lease, what will be...
The Harris Company is the lessee on a four-year lease with the following payments at the end of each year: Year 1: $ 15,500 Year 2: $ 20,500 Year 3: $ 25,500 Year 4: $ 30,500 An appropriate discount rate is 7 percentage, yielding a present value of $76,475. a-1. If the lease is an operating lease, what will be the initial value of the right-of-use asset? a-2. If the lease is an operating lease, what will be the initial...
Krawczek Company will enter into a lease agreement with Heavy Equipment Co. where Krawczek will make lease payments over the next five years. The lease is cancelable and requires equal annual payments of $24,800 per year beginning on January 1 of the first year. The last payment will be January 1 of year 5, and Krawczek will continue to use the asset until December 31 of that year. Other important information includes the following:The fair value of the equipment is...