Manufacturers Southern leased high-tech electronic equipment from International Machines on January 1, 2024. International Machines manufactured the equipment at a cost of $96,000. Manufacturers Southern's fiscal year ends December 31.
Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
Related Information: | ||
---|---|---|
Lease term | 2 | years (8 quarterly periods) |
Quarterly rental payments | $ 16,500 | at the beginning of each period |
Economic life of asset | 2 | years |
Fair value of asset | $ 125,370 | |
Implicit interest rate | 6% |
Show how International Machines determined the $16,500 quarterly lease payments.
Prepare appropriate entries for International Machines to record the lease at its beginning, January 1, 2024, and the second lease payment on April 1, 2024.
Quarterly= 4
N= (2years*4)= 8 I=(6%/4)= 1.5%
use PVAD of $1= 7.59821
payment amount: 16,500 125,370/7.59821= 16,499.938801376
1) answer: PV factors based on
table or calculator | PVAD of $1 |
PV of lease | $ 125,370 |
n= | 8 |
i= | 1.5% |
lease payment | 16,500 |
2)
year | Lease payments (a) | Effective interest(1.5%* outstanding balance) (B) | Decrease in outstanding balance C=A-B | Outstanding balance (last year-C) |
Jan1 | 125,370 | |||
Jan 1 | 16,500 | 0 | 16,500 | 108,870 |
April 1 | 16,500 | 1,633 | 14,867 | 94,003 |
Record the lease. Jan 1 2024
Dr. lease receivable 125,370
Dr. COGS 96,000
Cr. Sales revenue 125,370
Cr. Equipment 96,000
Record cash received. Jan 1 2024
Dr. Cash 16,500
Cr. Lease receivable 16,500
Record cash received. April 1 2024
Dr. Cash 16,500
Cr. Interest revenue 1,633
Cr. Lease receivable 14,867
Manufacturers Southern leased high-tech electronic equipment from International Machines on January 1, 2024. International Machines manufactured the equipment at a cost of $96,000. Manufacturers Southern's fiscal year ends December 31. Note: Use tables,
Manufacturers Southern leased high-tech electronic equipment from International Machines on January 1, 2021. International Machines manufactured the equipment at a cost of $96,000. Manufacturers Southern's fiscal year ends December 31. (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.) Related Information: Lease term Quarterly rental payments Economic life of asset Fair value of asset Implicit interest rate 2 years (8 quarterly periods) $16,500...
Manufacturers Southern leased high-tech electronic equipment from International Machines on January 1, 2021. International Machines manufactured the equipment at a cost of $100,000. Manufacturers Southern's fiscal year ends December 31. (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.) Related Information: Lease term Quarterly rental payments Economic life of asset Fair value of asset Implicit interest rate 2 years (8 quarterly periods) $16,500...
Manufacturers Southern leased high-tech electronic equipment from International Machines on January 1, 2021. International Machines manufactured the equipment at a cost of $102,000. Manufacturers Southern's fiscal year ends December 31. (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.) Related Information: Lease term 2 years (8 quarterly periods) Quarterly rental payments $16,700 at the beginning of each period Economic life of asset 2...
Manufacturers Southern leased high-tech electronic equipment from International Machines on January 1, 2021. International Machines manufactured the equipment at a cost of $100,000. Manufacturers Southern's fiscal year ends December 31. (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.) Related Information: Lease term 2 years (8 quarterly periods) Quarterly rental payments $16,500 at the beginning of each period Economic life of asset 2...
Edison Leasing leased high-tech electronic equipment to Manufacturers Southern on January 1, 2024. Edison purchased the equipment from International Machines at a cost of $127,024.Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)Related Information:Lease term2years (8 quarterly periods)Quarterly rental payments$ 17,000at the beginning of each periodEconomic life of asset2yearsFair value of asset$ 127,024Implicit interest rate (Also lessee’s incremental borrowing rate)8%Required:Prepare a lease...
Help with Required 1 and 2. Manufacturers Southern leased high-tech electronic equipment from International Machines on January 1, 2021. International Machines manufactured the equipment at a cost of $100,000. Manufacturers Southern's fiscal year ends December 31. (FV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Related Information: Lease term Quarterly rental payments Economic life of asset Fair value of asset Implicit interest rate...
Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2021. Edison purchased the equipment from International Machines at a cost of $119,292. (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.) Related Information: Lease term 2 years (8 quarterly periods) Quarterly rental payments $15,700 at the beginning of each period Economic life of asset 2 years Fair value of asset...
Edison Leasing leased high-tech electronic equipment to Manufacturers Southern on January 1, 2021. Edison purchased the equipment from International Machines at a cost of $113,515. (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.) Related Information: Lease term 2 years (8 quarterly periods) Quarterly rental payments $15,700 at the beginning of each period Economic life of asset 2 years Fair value of asset...
Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2021. Edison purchased the equipment from International Machines at a cost of $112,446. (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 Intermediate Accounting Tenth Edition table.) Related Information: Lease term 2 years (8 quarterly periods) Quarterly rental payments $15,300 at the beginning of each period Economic life of asset 2 years Fair...
Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2021. Edison purchased the equipment from International Machines at a cost of $127,024. (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.) Related Information: Lease term 2 years (8 quarterly periods) Quarterly rental payments $17,000 at the beginning of each period Economic life of asset 2 years Fair value of asset...