ZuoTi.Pro
Question

On March 31, 2021, Southwest Gas leased equipment from a supplier and agreed to pay $310,000...

On March 31, 2021, Southwest Gas leased equipment from a supplier and agreed to pay $310,000 annually for 21 years beginning March 31, 2022. Generally accepted accounting principles require that a liability be recorded for this lease agreement for the present value of scheduled payments. Accordingly, at inception of the lease, Southwest recorded a $3,646,864 lease liability. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: Determine the interest rate implicit in the lease agreement. (Do not round intermediate calculations.)

Present value of lease:
n =
i =
Lease payments
business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1
Present value of lease: 3646864
n = 21
i = 6%
Lease payments 310000
Workings:
Present value of lease 3646864
Divide by Lease payments 310000
PV factor 11.76408
The PV factor 11.76408 for 21 years is at 6%
(1-(1.06)^-21)/.06 = 11.76408
0 0
Add a comment
Know the answer?
Add Answer to:
On March 31, 2021, Southwest Gas leased equipment from a supplier and agreed to pay $310,000...
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

  • On March 31, 2021, Southwest Gas leased equipment from a supplier and agreed to pay $350,000...

    On March 31, 2021, Southwest Gas leased equipment from a supplier and agreed to pay $350,000 annually for 15 years beginning March 31, 2022. Generally accepted accounting principles require that a liability be recorded for this lease agreement for the present value of scheduled payments. Accordingly, at inception of the lease, Southwest recorded a $3,187,770 lease liability. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from...

  • help me please, On September 30, 2018, Truckee Garbage leased equipment from a supplier and agreed...

    help me please, On September 30, 2018, Truckee Garbage leased equipment from a supplier and agreed to pay $141,000 annually for 15 years beginning September 30, 2019. Generally accepted accounting principles require that a liability be recorded for this lease agreement for the present value of scheduled payments. Accordingly, at inception of the lease, Truckee recorded a $1,170,898 lease liability. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use...

  • On June 30, 2021, Fly-By-Night Airlines leased a jumbo jet from Boeing Corporation. The terms of...

    On June 30, 2021, Fly-By-Night Airlines leased a jumbo jet from Boeing Corporation. The terms of the lease require Fly-By-Night to make 20 annual payments of $1,300,000 on each June 30. Generally accepted accounting principles require this lease to be recorded as a liability for the present value of scheduled payments. Assume that a 7% interest rate properly reflects the time value of money in this situation. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD...

  • On June 30, 2021, Fly-By-Night Airlines leased a jumbo jet from Boeing Corporation. The terms of...

    On June 30, 2021, Fly-By-Night Airlines leased a jumbo jet from Boeing Corporation. The terms of the lease require Fly-By-Night to make 20 annual payments of $1,900,000 on each June 30. Generally accepted accounting principles require this lease to be recorded as a liability for the present value of scheduled payments. Assume that a 7% interest rate properly reflects the time value of money in this situation. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD...

  • On June 30, 2021, Fly-By-Night Airlines leased a jumbo jet from Boeing Corporation. The terms of...

    On June 30, 2021, Fly-By-Night Airlines leased a jumbo jet from Boeing Corporation. The terms of the lease require Fly-By-Night to make 20 annual payments of $1,500,000 on each June 30. Generally accepted accounting principles require this lease to be recorded as a liability for the present value of scheduled payments. Assume that a 7% interest rate properly reflects the time value of money in this situation. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD...

  • On June 30, 2021, Fly-By-Night Airlines leased a jumbo jet from Boeing Corporation. The terms of...

    On June 30, 2021, Fly-By-Night Airlines leased a jumbo jet from Boeing Corporation. The terms of the lease require Fly-By-Night to make 20 annual payments of $400,000 on each June 30. Generally accepted accounting principles require this lease to be recorded as a liability for the present value of scheduled payments. Assume that a 7% interest rate properly reflects the time value of money in this situation. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD...

  • On January 1, 2021, Jasperse Corporation leased equipment under a finance lease designed to earn the...

    On January 1, 2021, Jasperse Corporation leased equipment under a finance lease designed to earn the lessor a 11% rate of return for providing long-term financing. The lease agreement specified ten annual payments of $120,000 beginning January 1, and each December 31 thereafter through 2029. A 10-year service agreement was scheduled to provide maintenance of the equipment as required for a fee of $5,000 per year. Insurance premiums of $4,000 annually are related to the equipment. Both amounts were to...

  • On October 1, 2021, Sonoma Company leased equipment from Napa Inc. in lease payable in five...

    On October 1, 2021, Sonoma Company leased equipment from Napa Inc. in lease payable in five equal annual payments of $560,000, beginning Oct 1, 2022. Similar transactions have carried an 9% interest rate. The right-of-use asset would be recorded at: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Choices are 2800000 0 2178204 2374243

  • CH 15 Homework Saved 5 King Company leased equipment from Mann Industries. The lease agreement qualifies...

    CH 15 Homework Saved 5 King Company leased equipment from Mann Industries. The lease agreement qualifies as a finance lease and requires annual lease payments of $51,023 over a seven-year lease term (also the asset's useful life), with the first payment at January 1, the beginning of the lease. The interest rate is 5%. The asset being leased cost Mann $260,000 to produce. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD...

  • King Company leased equipment from Mann Industries. The lease agreement qualifies as a finance lease and...

    King Company leased equipment from Mann Industries. The lease agreement qualifies as a finance lease and requires annual lease payments of $59,349 over a five-year lease term (also the asset’s useful life), with the first payment at January 1, the beginning of the lease. The interest rate is 6%. The asset being leased cost Mann $215,000 to produce. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s)...

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
ADVERTISEMENT