Question

Pearl Leasing Company signs an agreement on January 1, 2017, to lease equipment to Cole Company. The following information relates to this agreement. 1. The term of the noncancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6 years. 2. The cost of the asset to the lessor is $311,000. The fair value of the asset at January 1, 2017, is $311,000. 3. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $88,594, none of which is guaranteed. 4. Cole Company assumes direct responsibility for all executory costs. 5. The agreement requires equal annual rental payments, beginning on January 1, 2017. 6. Collectibility of the lease payments is reasonably predictable. There are no important uncertainties surrounding the amount of costs yet to be incurred by the lessor. Click here to view factor tables

Assuming the lessor desires a 9% rate of return on its investment, calculate the amount of the annual rental payment required. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.) The amount of the annual rental payment $ SHOW LIST OF ACCOUNTS LINK TO TEXT

Prepare an amortization schedule that would be suitable for the lessor for the lease term. (Round answers to 0 decimal places e.g. 58,971.) PEARL LEASING COMPANY (Lessor) Lease Amortization Schedule Date Annual Lease Payment Plus URV Interest on Lease Receivable Recovery of Lease Receivable Lease Receivable 1/1/17 $ $ $ $ 1/1/17 1/1/18 1/1/19 1/1/20 1/1/21 1/1/22 12/31/22 $ $ $

Answer 1

As the lessor desires Yate return nvestme on ib Present value at inimum tease paymens pRntValue f unguarantead esidual value Fair ualue a avet .at 7. Interest Yate calculating Yeas as the lease ferm is t Pv1FA% , 5Years7V 8,591 'PvIF (96Y lease Payments 3 ,li, oo U+3.83965) t 88,594 x o.59627 31100a lease payments 4.3g965 xPvot lease paymeats 311000 52826 pu o lease paymens 5200 Scanned with CamSca the amourt of anmual xental CS ment S2,800

pearl Leacing Cmpans Lease ArmortiSabon Schedule InkerestonRecovery Lease Anmual Lease Dale Lease Recei vable Paymet plus uRV Lease receivable Receivable 311000 258,200 52,g0a 258,200 29, S2 228,638 23,238 223,638 20,S77 32, 223 (१८,५॥ऽ 17,677 35,123 16,292 16l,292 2 ३१, 28५ 23,008 22 4,729 31279 31279 12l3l22 87315 1,279 $৭५३१५ |5),০০০ Thank ou Scanned with CS CamScanner