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Solution:
As present value of lease payment is higher than cost of equippment, thereofre Corinth classify this lease as "Sales type lease with selling profit"
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Corinth Co. leased non-specialized equipment to Athens Corporation for an eight-year period, at which time possession...
Corinth Co. leased non-specialized equipment to Athens Corporation for an eight-year period, at which time possession...
Corinth Co. leased non-specialized equipment to Athens Corporation for an eight-year period, at which time possession of the equipment will revert back to Corinth. The equipment cost Corinth $16 million and has an expected useful life of 12 years. Its normal sales price is $22.4 million. The present value of the lease payments for both the lessor and lessee is $20.6 million. The first payment was made at the beginning of the lease. How should Corinth classify this lease? My...
On January 1, Claude Co. leased a car for a four-year period, at which time possession...
On January 1, Claude Co. leased a car for a four-year period, at which time possession of the car will revert back to the lessor. Annual lease payments are $10,700 due on December 31 of each year, calculated by the lessor using a 8% discount rate. Negotiations led to Claude guaranteeing the lessor a $32,100 residual value at the end of the lease term although Claude estimates that the residual value after four years will be $29,800. What is the...
On January 1, Roberts Co. leased a truck for a four-year period, at which time possession...
On January 1, Roberts Co. leased a truck for a four-year period, at which time possession of the truck will revert back to the lessor Annual lease payments are $11,500 due on December 31 of each year, calculated by the lessor using a 8% discount rate. Negotiations led to Roberts guaranteeing the lessor a $34,500 residual value at the end of the lease term although Roberts estimates that the residual value after four years will be $32,100. What is the...
On January 1, Claude Co. leased a car for a four-year period, at which time possession...
On January 1, Claude Co. leased a car for a four-year period, at which time possession of the car will revert back to the lessor. Annual lease payments are $27,200 due on December 31 of each year, calculated by the lessor using a 6% discount rate. Negotiations led to Claude guaranteeing the lessor a $81,600 residual value at the end of the lease term although Claude estimates that the residual value after four years will be $77,700. What is the...
On January 1, Garcia Supply leased a truck for a five-year period, at which time possession...
On January 1, Garcia Supply leased a truck for a five-year period, at which time possession of the truck will revert back to the lessor Annual lease payments are $14,500 due on December 31 of each year, calculated by the lessor using a 6% discount rate Negotiations led to Garcia guaranteeing a $67,600 residual value at the end of the lease term. Garcia estimates that the residual value after four years will be $65.700. (FV of S1. PV of $1....
On January 1, Garcia Supply leased a truck for a four-year period, at which time possession...
On January 1, Garcia Supply leased a truck for a four-year period, at which time possession of the truck will revert back to the lessor. Annual lease payments are $11,000 due on December 31 of each year, calculated by the lessor using a 5% discount rate. Negotiations led to Garcia guaranteeing a $39,800 residual value at the end of the lease term. Garcia estimates that the residual value after four years will be $38,600. (FV of $1, PV of $1,...
On December 31, 2021, Newton LeaseCorp. leased equipment to Worcester Construction for a four-year period ending...
On December 31, 2021, Newton LeaseCorp. leased equipment to Worcester Construction for a four-year period ending December 31, 2025, at which time possession of the leased asset will revert back to Newton LeaseCorp. The equipment cost Newton LeaseCorp. $347,516 and has an expected useful life of six years. Its normal sales price is $347,516. The lessee-guaranteed residual value at December 31, 2025, is $17,000. Equal payments under the lease are $95,000 and are due on December 31 of each year....
Rhone-Metro Industries manufactures equipment that is sold or leased. On December 31, 2013, Rhone-Metro leased equipment...
Rhone-Metro Industries manufactures equipment that is sold or leased. On December 31, 2013, Rhone-Metro leased equipment to Western Soya Co. for a four-year period ending December 31, 2017, at which time possession of the leased asset will revert back to Rhone-Metro. The equipment cost $300,000 to manufacture and has an expected useful life of six years. Its normal sales price is $365,760. The expected residual value of $25,000 at December 31, 2017, is not guaranteed. Equal payments under the lease...
On January 1, Garcia Supply leased a truck for a five-year period, at which time possession...
On January 1, Garcia Supply leased a truck for a five-year period, at which time possession of the truck will revert back to the lessor. Annual lease payments are $16,500 due on December 31 of each year, calculated by the lessor using a 4% discount rate. Negotiations led to Garcia guaranteeing a $79,300 residual value at the end of the lease term. Garcia estimates that the residual value after four years will be $78,100. (FV of $1. PV of $1....
Rhone-Metro Industries manufactures equipment that is sold or leased. On December 31, 2021, Rhone-Metro leased equipment...
Rhone-Metro Industries manufactures equipment that is sold or
leased. On December 31, 2021, Rhone-Metro leased equipment to
Western Soya Co. for a four-year period ending December 31, 2025,
at which time possession of the leased asset will revert back to
Rhone-Metro. The equipment cost $250,000 to manufacture and has an
expected useful life of six years. Its normal sales price is
$294,546. The expected residual value of $17,000 at December 31,
2025, is not guaranteed. Equal payments under the lease...
On January 1, Claude Co. leased a car for a four-year period, at which time possession of the car will revert back to the lessor. Annual lease payments are $10,700 due on December 31 of each year, calculated by the lessor using a 8% discount rate. Negotiations led to Claude guaranteeing the lessor a $32,100 residual value at the end of the lease term although Claude estimates that the residual value after four years will be $29,800. What is the...
On January 1, Roberts Co. leased a truck for a four-year period, at which time possession of the truck will revert back to the lessor Annual lease payments are $11,500 due on December 31 of each year, calculated by the lessor using a 8% discount rate. Negotiations led to Roberts guaranteeing the lessor a $34,500 residual value at the end of the lease term although Roberts estimates that the residual value after four years will be $32,100. What is the...
On January 1, Claude Co. leased a car for a four-year period, at which time possession of the car will revert back to the lessor. Annual lease payments are $27,200 due on December 31 of each year, calculated by the lessor using a 6% discount rate. Negotiations led to Claude guaranteeing the lessor a $81,600 residual value at the end of the lease term although Claude estimates that the residual value after four years will be $77,700. What is the...
On January 1, Garcia Supply leased a truck for a five-year period, at which time possession of the truck will revert back to the lessor Annual lease payments are $14,500 due on December 31 of each year, calculated by the lessor using a 6% discount rate Negotiations led to Garcia guaranteeing a $67,600 residual value at the end of the lease term. Garcia estimates that the residual value after four years will be $65.700. (FV of S1. PV of $1....
On January 1, Garcia Supply leased a truck for a five-year period, at which time possession of the truck will revert back to the lessor. Annual lease payments are $16,500 due on December 31 of each year, calculated by the lessor using a 4% discount rate. Negotiations led to Garcia guaranteeing a $79,300 residual value at the end of the lease term. Garcia estimates that the residual value after four years will be $78,100. (FV of $1. PV of $1....
Rhone-Metro Industries manufactures equipment that is sold or
leased. On December 31, 2021, Rhone-Metro leased equipment to
Western Soya Co. for a four-year period ending December 31, 2025,
at which time possession of the leased asset will revert back to
Rhone-Metro. The equipment cost $250,000 to manufacture and has an
expected useful life of six years. Its normal sales price is
$294,546. The expected residual value of $17,000 at December 31,
2025, is not guaranteed. Equal payments under the lease...
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