Solution 1:
PV Factor based on | |
Table or Calculator function | PVAD of $1 |
Lease payment | $52,917 |
n= | 5 |
i= | 4.00% |
PV factor | 4.62990 |
Selling price of equipment | $245,000 |
Solution 2:
Income Statement | |
For the year ended December 31 | |
Particulars | Amount |
Sales revenue | $245,000.00 |
Cost of goods sold | -$195,000.00 |
Interest revenue [($245,000 - $52,917)*4%] | $7,683.00 |
Income statement increase | $57,683.00 |
King Company leased equipment from Mann Industries. The lease agreement qualifies as a finance lease and...
King Company leased equipment from Mann Industries. The lease agreement qualifies as a finance lease and requires annual lease payments of $52,917 over a five-year lease term (also the asset's useful life), with the first payment at January 1, the beginning of the lease. The interest rate is 4%. The asset being leased cost Mann $195,000 to produce. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s)...
CH 15 Homework Saved 5 King Company leased equipment from Mann Industries. The lease agreement qualifies as a finance lease and requires annual lease payments of $51,023 over a seven-year lease term (also the asset's useful life), with the first payment at January 1, the beginning of the lease. The interest rate is 5%. The asset being leased cost Mann $260,000 to produce. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD...
King Company leased equipment from Mann Industries. The lease agreement qualifies as a finance lease and requires annual lease payments of $49,677 over a five-year lease term (also the asset's useful life), with the first payment at January 1, the beginning of the lease. The interest rate is 4%. The asset being leased cost Mann $180,000 to produce. (FV of $1, PV of $1. FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s)...
King Company leased equipment from Mann Industries. The lease agreement qualifies as a finance lease and requires annual lease payments of $59,349 over a five-year lease term (also the asset’s useful life), with the first payment at January 1, the beginning of the lease. The interest rate is 6%. The asset being leased cost Mann $215,000 to produce. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s)...
King Company leased equipment from Mann Industries. The lease agreement qualifies as a finance lease and requires annual lease payments of $49,998 over a six-year lease term (also the asset’s useful life), with the first payment at January 1, the beginning of the lease. The interest rate is 7%. The asset being leased cost Mann $205,000 to produce. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s)...
Exercise 15-15 (Algo) Sales-type lease; lessor; income statement effects [LO 15-3] King Company leased equipment from Mann Industries. The lease agreement qualifies as a finance lease and requires annual lease payments of $36,461 over a eight-year lease term (also the asset’s useful life), with the first payment at January 1, the beginning of the lease. The interest rate is 6%. The asset being leased cost Mann $190,000 to produce. (FV of $1, PV of $1, FVA of $1, PVA of...
A lease agreement that qualifies as a finance lease calls for annual lease payments of $50,000 over a six-year lease term (also the asset's useful life), with the first payment at January 1, the beginning of the lease. The interest rate is 5%. The lessor's fiscal year is the calendar year. The lessor manufactured this asset at a cost of $235,000. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)...
A lease agreement that qualifies as a finance lease calls for annual lease payments of $40,000 over a five-year lease term (also the asset's useful life), with the first payment at January 1, 2016, the beginning of the lease. The interest rate is 4%. The lessor's fiscal year is the calendar year. The lessor manufactured this asset at a cost of $132,000. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of...
A lease agreement that qualifies as a finance lease calls for annual lease payments of $30,000 over a four-year lease term (also the asset’s useful life), with the first payment at January 1, 2016, the beginning of the lease. The interest rate is 8%. The lessor’s fiscal year is the calendar year. The lessor manufactured this asset at a cost of $100,000. Required: c. What would be the increase in earnings that the lessor would report in its income statement...
A lease agreement that qualifies as a finance lease calls for annual lease payments of $60,000 over a eight-year lease term (also the asset’s useful life), with the first payment at January 1, the beginning of the lease. The interest rate is 4%. The lessor’s fiscal year is the calendar year. The lessor manufactured this asset at a cost of $400,000. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)...