date | Amount | Present value factor 8% | present value | |
31 dec 2020 | $ 40000 | 1 | $ 40000 | |
31 dec 2021 | $ 40000 | 0.9259 | $ 37036 | |
31 dec 2022 | $ 40000 | 0.8573 | $ 34292 | |
31 dec 2023 | $ 40000 | 0.7938 | $ 31752 | |
31 dec 2024 | $ 40000 | 0.7350 | $ 29400 | |
$ 172480 | ||||
Loan amortization schdule | Annual lease payament | interest expenses 8% | reduction of lease liability $ | lease liability $ | |
172480 | |||||
31 dec 2020 | $ 40000 | 40000 | 132480 | ||
31 dec 2021 | $ 40000 | 10598 | 29402 | 103078 | |
31 dec 2022 | $ 40000 | 8246 | 31754 | 71324 | |
31 dec 2023 | $ 40000 | 5706 | 34294 | 37030 | |
31 dec 2024 | $ 40000 | 2962 | 37030 |
Journal Entries | |||
dec 31 2020 | Right to use Asset | $ 172480 | |
Lease Liability | $ 172480 | ||
(To record Liability) | |||
dec 31 , 2020 | Lease Liability | $ 40000 | |
Cash | $ 40000 | ||
(To record lease payments) | |||
Question 6 Ludwick Steel Company, as lessee, signed a lease agreement for equipment for 5 years,...
Kingbird Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2017. Annual rental payments of $43,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 7%; Kingbird’s incremental borrowing rate is 9%. Kingbird is unaware of the rate being used by the lessor. At the end of the lease, Kingbird has the option to buy the...
Marigold Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2020. Annual rental payments of $43,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 7%; Marigold’s incremental borrowing rate is 9%. Marigold is unaware of the rate being used by the lessor. At the end of the lease, Marigold has the option to buy the...
Problem 21-6 The following facts pertain to a noncancelable lease agreement between Faldo Leasing Company and Stellar Company, a lessee. January 1, 2017 $136,159 Inception date Annual lease payment due at the beginning of each year, beginning with January 1, 2017 Residual value of equipment at end of lease term, guaranteed by the lessee Lease term Economic life of leased equipment Fair value of asset at January 1, 2017 Lessor's implicit rate Lessee's incremental borrowing rate $54,000 6 years 6...
Exercise 21-10 Sage Leasing Company signs an agreement on January 1, 2017, to lease equipment to Cole Company. The following information relates to this agreement. 1. The term of the noncancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6 years. 2. The cost of the asset to the lessor is $277,000. The fair value of the asset at January 1, 2017, is $277,000. 3. The asset will revert to the lessor...
Ludwick steel company as lessee, singed a lease agreement for equipment for 5 years, beginning december 31,2017. Annual rental payments of 40,000 are to be made at the beginning of each lease year,(december31). The interest rate used by the lessor in setting the paymment scheduled at 6%. Ladwick incremental borrowing rate is 8%. Ladwick umaware of the rate being used be the lessor. at the end of the lease, Ladeick has the option to buy the equipment for $5,000, considerably...
Exercise 21A-5 a-c Tamarisk Leasing Company signs an agreement on January 1, 2017, to lease equipment to Cole Company. The following information relates to this agreement 1. The term of the non-cancelable lease is 6 years with no renewal option. The equipment has an 2. The cost of the asset to the lessor is $291,000. The fair value of the asset at January 1, 2017, is 3. The asset will revert to the lessor at the end of the lease...
Question 6 On December 31, 2019, Burke Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Burke to make annual payments of $8,668 at the beginning of each year, starting December 31, 2019. The machine has an estimated useful life of 6 years and a $5,000 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Burke uses the straight-line method of depreciation for all of...
nent CALCULATOR GE MY INSTRUCTOR FULL SCREEN PRINTER VERSION BACK NEXT Problem 21A-3 a-d (Part Level Submission) Culver Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2017. Annual rental payments of $55,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 6%; Culver's incremental borrowing rate is 8%. Culver is unaware of the rate being...
Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Kingbird Company. The following information relates to this agreement. 1. The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. 2. The fair value of the asset at January 1, 2020, is $74,000. 3. The asset will revert to the lessor at the end of the lease term, at which time the asset...
Pharoah Leasing Company agrees to lease equipment to Novak Corporation on January 1, 2020. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. 2. The cost of the machinery is $525,000, and the fair value of the asset on January 1, 2020, is $713,000. 3. At the end of the lease term, the asset reverts to the...