Hayes Corp. is a manufacturer of truck trailers. On January 1, 2021, Hayes Corp. leases ten...
Hayes Corp. is a manufacturer of truck trailers. On January 1, 2021, Hayes Corp. leases ten trailers to Lester Company under a six-year non-cancelable lease agreement. The following information about the lease and the trailers is provided:
1) Annual payment of $120,175 is due on January 1, 2021 and at December 31 from 2021 to 2025. Hayes Corp. has an implicit rate of 8% (present value factor for 6 periods at 8% is 4.99271).
2) Titles to the trailers pass to Lester at the end of the lease.
3) The fair value of each trailer is $60,000. The cost of each trailer to Hayes Corp. is $54,000. Each trailer has an expected useful life of nine years.
4) Collectibility of the lease payments is probable.
Instructions
(a) What type of lease is this for the Lester Company and Hayes Corp?
(b) Prepare a lease amortization schedule for Lester Company till 12/31/2021.
(c) Prepare the journal entries for Lester Company on 1/1/2021 and 12/31/2021. Round all amounts to the nearest dollar.
Homework Answers
Solution:
Hope this helps! In case of any clarifications, kindly use the comment box below
Add Answer to:
Hayes Corp. is a manufacturer of truck trailers. On January 1,
2021, Hayes Corp. leases ten...
Part 2: Classifying Leases 1. Lessee Co. leases a common piece of machinery from Lessor Corp....
Part 2: Classifying Leases 1. Lessee Co. leases a common piece of machinery from Lessor Corp. The lease begins on January 1, 2019, and includes the following details: • The lease has a term of four years and is non-cancelable. • The lease contains no renewal or purchase options. The machinery reverts to Lesson Corp. at the termination of the lease. • The machinery has a fair value at commencement of the lease of $40,000, an estimated economic life of...
Technoid Inc, sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2021....
Technoid Inc, sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2021. The manufacturing cost of the computers was $18 million. This noncancelable lease had the following terms 1 Lease payments $3,035,786 semiannually, first payment at January 1, 2021; remaining payments at June 30 and December 31 each year through June 30, 2025. 2 term 5 years ( 10 semiannual payments) 3 No residual value, no purchase option, 4 Economic life of equipment 5 years 5...
Technold Inc. sells computer systems. Technold leases computers to Lone Star Company on January 1, 2021....
Technold Inc. sells computer systems. Technold leases computers to Lone Star Company on January 1, 2021. The manufacturing cost of the computers was $20 million. This noncancelable lease had the following terms: • Lease payments: $2,960,105 semiannually, first payment at January 1, 2021; remaining payments at June 30 and December 31 each year through June 30, 2025. • Lease term: 5 years (10 semiannual payments). • No residual value, no purchase option. • Economic life of equipment: 5 years. •...
Technoid Inc. sells computer systems. Technold leases computers to Lone Star Company on January 1, 2021....
Technoid Inc. sells computer systems. Technold leases computers to Lone Star Company on January 1, 2021. The manufacturing cost of the computers was 512 million. This noncancelable lease had the following terms: • Lease payments: $7777? semiannually, first payment at January 1, 2021; remaining payments at June 30 and December 31 each year through June 30, 2025 • Lease term: five years (10 semiannual payments) • There is a residual value of $500,000. And the lessee guaranteed a residual value...
Marin Corporation leases a building to Cullumber, Inc. on January 1, 2020. The following facts pertain...
Marin Corporation leases a building to Cullumber, Inc. on January 1, 2020. The following facts pertain to the lease agreement. 1. The lease term is 10 years with equal annual rental payments of $3,469 at the end of each year. 2. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. 3. The building has a fair value of $34,400, a book value to...
The agreement requires equal rental payments of $52,407 beginning on December 31 2008 with a residual value of $60,...
The agreement requires equal rental payments of $52,407 beginning on December 31 2008 with a residual value of $60,000 guaranteed by the lessee at the lease end. The payments provide Piper Corp. with a 6% implicit interest rate which is also known to Runyan, Runyan's incremental borrowing rate is 10% per year 1. The fair value of ten trailers is $300,000. The cost of ten trailers to Piper Corp. is S260,000. Each trailer has an expected useful life of nine...
Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2013....
Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2013. The manufacturing cost of the computers was $19 million. This non-cancelable lease had the following terms: • Lease payments: $2,617,769 semiannually; first payment at January 1, 2013; remaining payments at June 30 and December 31 each year through June 30, 2017. • Lease term: 5 years (10 semi-annual payments) • No residual value; no bargain purchase option • Economic life of equipment: 5 years...
On January 1, 2016, Ballieu Company leases specialty equipment with an economic life of 8 years...
On January 1, 2016, Ballieu Company leases specialty equipment with an economic life of 8 years to Anderson Company. The lease contains the following terms and provisions: • The lease is noncancelable and has a term of 8 years. • The annual rentals are $31,000, payable at the beginning of each year. • The interest rate implicit in the lease is 12%. • Anderson agrees to pay all executory costs and is given an option to buy the equipment for...
Lessee Company leases heavy equipment on January 1, 2016, under a capital lease from Lessor Company...
Lessee Company leases heavy equipment on January 1, 2016, under a capital lease from Lessor Company with the following lease provisions: 1. The lease is non-cancelable and has a term of 10 years 2. The lease does not contain a renewal or bargain purchase option 3. The annual rentals are 27,653.77, payable at the beginning of each year. 4. Lessee agrees to pay all executory costs 5. The interest rate implicit in the lease is 12%, which is known by...
Part 2: Classifying Leases 1. Lessee Co. leases a common piece of machinery from Lessor Corp. The lease begins on January 1, 2019, and includes the following details: • The lease has a term of four years and is non-cancelable. • The lease contains no renewal or purchase options. The machinery reverts to Lesson Corp. at the termination of the lease. • The machinery has a fair value at commencement of the lease of $40,000, an estimated economic life of...
Technold Inc. sells computer systems. Technold leases computers to Lone Star Company on January 1, 2021. The manufacturing cost of the computers was $20 million. This noncancelable lease had the following terms: • Lease payments: $2,960,105 semiannually, first payment at January 1, 2021; remaining payments at June 30 and December 31 each year through June 30, 2025. • Lease term: 5 years (10 semiannual payments). • No residual value, no purchase option. • Economic life of equipment: 5 years. •...
Technoid Inc. sells computer systems. Technold leases computers to Lone Star Company on January 1, 2021. The manufacturing cost of the computers was 512 million. This noncancelable lease had the following terms: • Lease payments: $7777? semiannually, first payment at January 1, 2021; remaining payments at June 30 and December 31 each year through June 30, 2025 • Lease term: five years (10 semiannual payments) • There is a residual value of $500,000. And the lessee guaranteed a residual value...
The agreement requires equal rental payments of $52,407 beginning on December 31 2008 with a residual value of $60,000 guaranteed by the lessee at the lease end. The payments provide Piper Corp. with a 6% implicit interest rate which is also known to Runyan, Runyan's incremental borrowing rate is 10% per year 1. The fair value of ten trailers is $300,000. The cost of ten trailers to Piper Corp. is S260,000. Each trailer has an expected useful life of nine...
Most questions answered within 3 hours.
-
Assume you are now 21 years old and
will start working as soon as you graduate...
asked 8 minutes ago -
In c++
What does operator overloading allow us to do
?
Why must the << and...
asked 8 minutes ago -
First, a constant force will NOT cause an object to accelerate
faster and faster; it will...
asked 12 minutes ago -
A 4.75 kg crate is suspended from the end of a short vertical
rope of negligible...
asked 22 minutes ago -
develop an automated invoice generator that helps a shop owner
to design their invoice. Problem 1...
asked 30 minutes ago -
2. Binomial Distribution Suppose I have an unfair coin, it lands
on heads 75% of the...
asked 44 minutes ago -
negotiators with absolutely no alternative to a negotiated
agreement sometimes.
a. become hostile and end the...
asked 43 minutes ago -
Write a Verilog program that tests whether a 4-bit input
variable is a Fibonacci number or...
asked 53 minutes ago -
MYSQL
Consider the sql statement "select * from t1 UNION t2" where t1
and t2 are...
asked 55 minutes ago -
2. A retailer sells 10,000 units at $10. Each unit costs the
retailer $7.00 to sell,...
asked 58 minutes ago -
If the Stratosphere elevator in Las Vegas is 500 m above the
ground when the cables...
asked 1 hour ago -
identify at least one other characteristics of the soils/sand
that may have impacted the growth of...
asked 1 hour ago