he following table summarizes Nowman's non-cancelable operating lease payments with remaining terms in excess of one year for the years succeeding December 31, 2018:
Year Ending December 31 |
Payment |
2019 |
$220,000 |
2020 |
$180,000 |
2021 |
$240,000 |
2022 |
$210,000 |
2023 |
$190,000 |
Thereafter (2024-2027) |
$832,000 |
What is the amount of operating lease obligation that needs to be reported on the balance sheet on December 31, 2018? Assuming that the discount rate is 8%. (Hint: for years after 2023, the annual lease payment should be treated as the average of prior years between 2019 to 2023.)
he following table summarizes Nowman's non-cancelable operating lease payments with remaining terms in excess of one...
Starboard Industries enters into a lease agreement with Bumble Motors to lease an automobile with a fair value of $73,000 under a 5- year lease on December 20, 2018. The lease commences on January 1, 2019, and Starboard will return the automobile to Bumble on December 31, 2023. The automobile has an estimated useful life of 7 years. Starboard made a lease payment of $10,300 on December 20, 2018. In addition, the lease agreement stipulates annual payments of $10,300, due...
Part VI: Lessee and Lessor on January 1, 2019 enter into a 4-year non-cancelable lease, with two renewal options of one year each, for equipment having a useful life of 12 years. Lessee's incremental borrowing rate is 8% while Lessor's implicit rate is 5% and known to Lessee. The Lessee uses the straight-line method of depreciation. The lease contains the following provisions: 1. Annual rental payments of $20,000 payable at the beginning of each year, starting January 1, 2019. 2....
Part VI: Lessee and Lessor on January 1, 2019 enter into a 4-year non-cancelable lease, with two renewal options of one year each, for equipment having a useful life of 12 years. Lessee's incremental borrowing rate is 8% while Lessor's implicit rate is 5% and known to Lessee. The Lessee uses the straight-line method of depreciation. The lease contains the following provisions: 1. Annual rental payments of $20,000 payable at the beginning of each year, starting January 1, 2019. 2....
3. On January 1, 2019, B enters into a 3-year non-cancelable lease agreement for an asset with an 8-year useful life. The lease requires annual payments of $20,000 on January 15 of each year. At the end of the lease term, B has the option to purchase the asset for the bargain purchase price of $33,660 and it is reasonably assured that B will exercise the option. B's incremental borrowing rate is 10%. Relevant present value factors are as follows:...
Leewin Brokerage enters into a lease agreement with Bumble Motors to lease an automobile with a fair value of $72,000 under a 5-year lease on December 20, 2018. The lease commences on January 1, 2019, and Leewin will return the automobile to Bumble on December 31, 2023. The automobile has an estimated useful life of 7 years. The lease agreement stipulates annual payments of $ 10,400, due on January 1 of 2019, 2020, 2021, 2022, and 2023. The implicit rate...
5. On January 1, 2019, B enters into a 4-year non-cancelable lease agreement for an asset with a 9-year useful life. The lease requires annual payments of $30,000 on December 31" of each year. B's incremental borrowing rate is 5%. Relevant present value factors are as follows: PV for ordinary annuity, 4 periods, 5% 3.54595 PV for annuity due, 4 periods, 5% 3.72325 INSTRUCTIONS: a. Determine whether the lease is a finance lease or an operating lease and explain why...
On January 1, 2021, Winn Heat Transfer leased office space under a three-year operating lease agreement. The arrangement specified three annual lease payments of $80,000 each, beginning December 21, 2021, and at each December 31 through 2023. The lessor, HVAC Leasing calculates lease payments based on annual interest rate of 5%. Winn also paid a $100,000 advance payment at the beginning of the lease. With permission of the owner, Winn made a structural modifications to the building before occupying the...
On January 1, 2019, B enters into a 3-year non-cancelable lease agreement for an asset with an 8-year useful life. The lease requires annual payments of $20,000 on January 15t of each year. At the end of the lease term, B has the option to purchase the asset for the bargain purchase price of $33,660 and it is reasonably assured that B will exercise the option. B's incremental borrowing rate is 10% Relevant present value factors are as follows: PV...
Assume that the following facts pertain to a non-cancelable
lease agreement between Coco Inc. and Bubs Corp, a Lessee.
Inception date
January 1, 2018
Residual value of equipment at end of lease term,
unguaranteed
$100,000
Lease term
6 years
Economic life of leased equipment
8 years
Fair value of asset at January 1, 2017
$800,000
Lessor’s implicit rate
12%
Lessee’s incremental borrowing rate
10%
The lessee assumes responsibility for all executory costs, which
are expected to amount to $4,000 per...
Assume that on December 31, 2019, 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 $67,199 beginning on December 31, 2019. 2 The fair value of the building on December 31, 2019 is $491.847 3 The building has an estimated economic life of 12 years, a guaranteed residual value of $10,500, and an expected residual...