Homework Answers
Answer:
To Prove the interest rate implcit in lease.
Answer: The present value of the unguranteed residual value is included in the present value of the lease liability.
Add Answer to:
QUESTION 15 To prove the interest rate implicit in a lease: Initial direct costs of establishing...
Exercise 15-35 (Algo) Lessor's initial direct costs; sales-type lease (LO15-3, 15-7) The lease agreement and related...
Exercise 15-35 (Algo) Lessor's initial direct costs; sales-type lease (LO15-3, 15-7) The lease agreement and related facts indicate the following: a. Leased equipment had a retail cash selling price of $400,000. Its useful life was six years with no residual value. b. The lease term was six years and the lessor paid $315,000 to acquire the equipment (thus, selling profit). c. Lessor's implicit rate when calculating annual lease payments was 8%. d. Annual lease payments beginning January 1, 2021, the...
What is Initial Lease Liability Problem 21A-8 a2-c (Part Level Submission) Windsor Inc. manufactures an X-ray machine with an estimated life of 12 years and leases it to Sheridan Medical Center for a...
What is Initial Lease
Liability
Problem 21A-8 a2-c (Part Level Submission) Windsor Inc. manufactures an X-ray machine with an estimated life of 12 years and leases it to Sheridan Medical Center for a period of 10 years. The normal selling price of the machine is $482,998, and its guaranteed residual value at the end of the non-cancelable lease term is estimated to be $15,500, The hospital will pay rents of $60,800 at the beginning of each year. Windsor incurred costs...
When a lessee is accounting for a capital (finance) lease a) a guaranteed residual value is...
When a lessee is accounting for a capital (finance) lease a) a guaranteed residual value is excluded from the “minimum lease payments.” b) an unguaranteed residual value is excluded from the “minimum lease payments.” c) a guaranteed residual value is basically an additional lease payment due at the end of the lease. d) the present value of any guaranteed residual is deducted from the leased asset cost in determining the depreciable amount. In calculating depreciation of a leased asset, the...
Executory costs include a) maintenance, interest and property taxes. b) interest, property taxes and depreciation. c)...
Executory costs include a) maintenance, interest and property taxes. b) interest, property taxes and depreciation. c) insurance, maintenance and property taxes. d) maintenance, insurance and income taxes. Which of the following is a correct statement regarding one of the ASPE capitalization criteria? a) The lease transfers ownership of the property to the lessor. b) The lease must contain a bargain purchase option. c) The lease term is 75% or more of the leased property’s estimated economic life. d) The fair...
Scenario 1: Here are some inputs for a noncancellable lease arrangement: .Semi-annual lease payment: $16,000 (used to determine PMT) Implicit rate: 7.5% (used to determine l/Y maybe?) incremental bor...
Scenario 1: Here are some inputs for a noncancellable lease arrangement: .Semi-annual lease payment: $16,000 (used to determine PMT) Implicit rate: 7.5% (used to determine l/Y maybe?) incremental borrowing rate: 7% (used to determine I/Y maybe?) Lease term: 4 years (used to determine N) Unguaranteed residual value: $15,000 (used to determine FV maybe?) Calculate the present value of the minimum lease payments from the viewpoint of both the lessor and the lessee: PV of the minimum lease payments (lessor): PV...
please help me answer those 2 question. TIA 1.Sorel Co. enters a lease for machinery from...
please help me answer those 2 question. TIA
1.Sorel Co. enters a lease for machinery from Sherman Co. Sorel appropriately accounts for the lease as a finance lease. The lease contains a bargain purchase option of $3,000 exercisable at the end of the three-year lease term. Sorel agrees to an annual lease payment of $11,000 due at the beginning of each period. Sorel knows the implicit interest rate is 4%. The present value factor of a single sum for three...
Information for four separate finance/sales-type lease scenarios is provided as follows: Complete the table, assuming that...
Information for four separate finance/sales-type lease scenarios is provided as follows: Complete the table, assuming that the lessee is aware of the lessor’s implicit lease rate. Note: Round each amount to the nearest whole dollar. A B C D Lessor’s desired rate of return 6% 7% 6% 8% Lease term 5 10 8 4 Fair value of underlying asset $35,000 $140,000 $18,000 $230,000 Beginning or end of year payments Beginning Beginning Beginning End Guaranteed residual value 0 12,000 0 80,000...
(Lessee Entries; Finance Lease and Unguaranteed Residual Value) Assume that on December 31, 2016, Kimberly-Clark Corp....
(Lessee Entries; Finance Lease and Unguaranteed Residual Value) Assume that on December 31, 2016, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage building from Sheffield Storage Company. The following information pertains to this lease agreement. 1. The agreement requires equal rental payments of $71,830 beginning on December 31, 2016. 2. The fair value of the building on December 31, 2016, is $525,176. 3. The building has an estimated economic life of 12 years, a guaranteed residual...
1.Describe the following terms: (a) residual value, (b) guaranteed residual value, and (c) initial direct costs....
1.Describe the following terms: (a) residual value, (b) guaranteed residual value, and (c) initial direct costs. 2.Explain the following concepts: (a) bargain purchase option and (b) bargain renewal option. 3.What payments are included in the lease liability? 4. Describe the accounting procedures involved in applying the operating lease method by a lessee.
Downton Ltd signs a non-cancellable five-year lease on an item of machinery on 1 July 2018....
Downton Ltd signs a non-cancellable five-year lease on an item of machinery on 1 July 2018. At the inception of the lease, the machinery has a fair value of $801,060. The expected economic life of the machinery is six years, when it is expected to have a residual value of nil. There is a bargain purchase option that Downton Ltd, as the lessee, will be able to exercise at the end of the fifth year of the lease for $300,000....
Exercise 15-35 (Algo) Lessor's initial direct costs; sales-type lease (LO15-3, 15-7) The lease agreement and related facts indicate the following: a. Leased equipment had a retail cash selling price of $400,000. Its useful life was six years with no residual value. b. The lease term was six years and the lessor paid $315,000 to acquire the equipment (thus, selling profit). c. Lessor's implicit rate when calculating annual lease payments was 8%. d. Annual lease payments beginning January 1, 2021, the...
What is Initial Lease
Liability
Problem 21A-8 a2-c (Part Level Submission) Windsor Inc. manufactures an X-ray machine with an estimated life of 12 years and leases it to Sheridan Medical Center for a period of 10 years. The normal selling price of the machine is $482,998, and its guaranteed residual value at the end of the non-cancelable lease term is estimated to be $15,500, The hospital will pay rents of $60,800 at the beginning of each year. Windsor incurred costs...
Scenario 1: Here are some inputs for a noncancellable lease arrangement: .Semi-annual lease payment: $16,000 (used to determine PMT) Implicit rate: 7.5% (used to determine l/Y maybe?) incremental borrowing rate: 7% (used to determine I/Y maybe?) Lease term: 4 years (used to determine N) Unguaranteed residual value: $15,000 (used to determine FV maybe?) Calculate the present value of the minimum lease payments from the viewpoint of both the lessor and the lessee: PV of the minimum lease payments (lessor): PV...
please help me answer those 2 question. TIA
1.Sorel Co. enters a lease for machinery from Sherman Co. Sorel appropriately accounts for the lease as a finance lease. The lease contains a bargain purchase option of $3,000 exercisable at the end of the three-year lease term. Sorel agrees to an annual lease payment of $11,000 due at the beginning of each period. Sorel knows the implicit interest rate is 4%. The present value factor of a single sum for three...
Most questions answered within 3 hours.
-
What is the incident wavelength in meters in IR instrument?
asked 13 minutes ago -
Jersey Computer Company has estimated the costs of debt and
equity capital (with bankruptcy and agency...
asked 19 minutes ago -
Water drips from the nozzle of a shower onto the floor 190 cm
below. The drops...
asked 25 minutes ago -
Banks creation of Money: Myths or Reality?
asked 29 minutes ago -
An average is an attempt to summarize a collection of data into
just one number. Discuss...
asked 57 minutes ago -
explain in details 250words please
The Effects of the Age Discrimination in Employment Act
(1967)
asked 44 minutes ago -
x1 = 1, y1 = 2
x2 = 2, y2 = 3
x3 = 3, y3...
asked 53 minutes ago -
A company's average cost per unit when x units are
produced is defined to be
Average...
asked 1 hour ago -
which of the following steps is found in dengue virus
replication but not Poliovirus replication?
1....
asked 58 minutes ago -
What is the final velocity of a solid sphere that rolls without
slipping down a 4.1...
asked 58 minutes ago -
A ________________________________ is a range of values within
which it is probable that the true value...
asked 1 hour ago -
A Co|Co2+ ||
Au+|Au galvanic cell
is constructed in which the standard cell voltage is
1.96...
asked 1 hour ago