ZuoTi.Pro
Question

Diablo Company leased a machine from Juniper Corporation on January 1, 2018. The machine has a...

Diablo Company leased a machine from Juniper Corporation on January 1, 2018. The machine has a fair value of $21,900,000. The lease agreement calls for four equal payments at the end of each year. The useful life of the machine was expected to be four years with no residual value.

The appropriate interest rate for this lease is 8%. Other information: PV of an ordinary annuity @8% for 4 periods: 3.31213 PV of an annuity due @ 8% for 4 periods: 3.57710

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Calculate equal four payments for lease agreements :

Equal four payments = Fair value of assets/PV of ordinary annuity

= 21900000/3.31213

Equal four payments = 6612059

So answer is $6612059

1 0
Add a comment
Know the answer?
Add Answer to:
Diablo Company leased a machine from Juniper Corporation on January 1, 2018. The machine has a...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Diablo Company leased a machine from Juniper Corporation on January 1, 2018. The machine has a...

    Diablo Company leased a machine from Juniper Corporation on January 1, 2018. The machine has a fair value of $14,000,000. The lease agreement calls for three equal payments at the end of each year in the amount of $5,828,886. The useful life of the machine was expected to be three years with no residual value. The appropriate interest rate for this lease is 12%. Required: 1. 2. & 3. Prepare the appropriate journal entry. (If no entry is required for...

  • Rumsfeld Corporation leased a machine on December 31, 2018, for a three-year period. The lease agreement calls for annua...

    Rumsfeld Corporation leased a machine on December 31, 2018, for a three-year period. The lease agreement calls for annual payments in the amount of $17,000 on December 31 of each year beginning on December 31, 2018. Rumsfeld has the option to purchase the machine on December 31, 2021, for $21,000 when its fair value is expected to be $31,000. The machine's estimated useful life is expected to be six years with no residual value. The appropriate interest rate for this...

  • Rumsfeld Corporation leased a machine on December 31, 2020, for a three-year period. The lease agreement...

    Rumsfeld Corporation leased a machine on December 31, 2020, for a three-year period. The lease agreement calls for annual payments in the amount of $18,000 on December 31 of each year beginning on December 31, 2020. Rumsfeld has the option to purchase the machine on December 31, 2023, for $20,000 when its fair value is expected to be $40,000. The machine's estimated useful life is expected to be five years with no residual value. The appropriate interest rate for this...

  • Blossom, Inc. leased equipment from Tower Company under a 4-year lease requiring equal annual payments of...

    Blossom, Inc. leased equipment from Tower Company under a 4-year lease requiring equal annual payments of $324152, with the first payment due at lease inception. The lease does not transfer ownership, nor is there a bargain purchase option. The equipment has a 4-year useful life and no salvage value. Blossom, Inc.'s incremental borrowing rate is 11% and the rate implicit in the lease (which is known by Blossom, Inc.) is 8%. Assuming that this lease is properly classified as a...

  • Please show whatever work you have! Blossom, Inc. leased equipment from Tower Company under a 4-year...

    Please show whatever work you have! Blossom, Inc. leased equipment from Tower Company under a 4-year lease requiring equal annual payments of $304152, with the first payment due at lease inception. The lease does not transfer ownership, nor is there a bargain purchase option. The equipment has a 4-year useful life and no salvage value. Blossom, Inc.'s incremental borrowing rate is 9% and the rate implicit in the lease (which is known by Blossom, Inc.) is 8%. Assuming that this...

  • American Food Services, Inc., leased a packaging machine from Barton and Barton Corporation. Barton and Barton...

    American Food Services, Inc., leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2018. The lease agreement for the $4.4 million (fair value and present value of the lease payments) machine specified four equal payments at the end of each year. The useful life of the machine was expected to be five years with no residual value. Barton and Barton's implicit interest rate was 11% FV of 51. PV...

  • 3. ABC Company, as lessee, enters into a lease agreement on January 1, 2018, for equipment....

    3. ABC Company, as lessee, enters into a lease agreement on January 1, 2018, for equipment. The following data are relevant to the lease agreement: 1. The term of the noncancelable lease is 4 years, with no renewal option. Payments of $978,446 are due on January 1of each year. 2. The fair value of the equipment on January 1, 2018 is $3,500,000. The equipment has an economic life of 6 years with no salvage value. 3. ABC Company depreciates similar...

  • American Food Services, Inc. leased a packaging machine from Barton and Barton Corporation. Barton and Barton...

    American Food Services, Inc. leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2021. The lease agreement for the $4 million (fair value and present value of the lease payments) machine specified four equal payments at the end of each year. The useful life of the machine was expected to be four years with no residual value. Barton and Barton's implicit interest rate was 10%. (FV of $1, PV...

  • American Food Services, Inc. leased a packaging machine from Barton and Barton Corporation. Barton and Barton...

    American Food Services, Inc. leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2021. The lease agreement for the $4.2 million (fair value and present value of the lease payments) machine specified four equal payments at the end of each year. The useful life of the machine was expected to be four years with no residual value. Barton and Barton's implicit interest rate was 9%. (FV of $1, PV...

  • American Food Services, Inc. leased a packaging machine from Barton and Barton Corporation. Barton and Barton...

    American Food Services, Inc. leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2021. The lease agreement for the $5.5 million (fair value and present value of the lease payments) machine specified four equal payments at the end of each year. The useful life of the machine was expected to be five years with no residual value. Barton and Barton's implicit interest rate was 11% (V of $1. PV...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
Active Questions
ADVERTISEMENT