Homework Answers
The present value of minimum lease payments is calculated using the PV function:-
=PV(rate,nper,pmt)
=PV(10%,10,-8000)
=49157
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Leased Asset Hopper Corporation signed a ten-year capital lease or finance lease on January 1, 2017. The lease requires...
On January 1, 2017, Bare Trees Company signed a three-year noncancelable lease with Dreams Inc. The...
On January 1, 2017, Bare Trees Company signed a three-year noncancelable lease with Dreams Inc. The lease calls for three payments of $62,258.09 to be made at each year-end. The lease payments include $3,000 of executory costs related to service. The lease is nonrenewable and has no bargain purchase option. Ownership of the leased asset reverts to Dreams at the end of the lease period, at which time Bare Trees has guaranteed that the leased asset will be worth at...
On January 1, 2017, Seven Wonders Inc. signed a five-year noncancelable lease with Moss Company. The...
On January 1, 2017, Seven Wonders Inc. signed a five-year noncancelable lease with Moss Company. The lease calls for five payments of $277,409.44 to be made at the end of each year. The leased asset has a fair value of $1,200,000 on January 1, 2017. Seven Wonders cannot renew the lease, there is no bargain purchase option, and ownership of the leased asset reverts to Moss at the lease end. The leased asset has an expected useful life of six...
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...
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 $52,917 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 4%. The asset being leased cost Mann $195,000 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)...
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 $49,677 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 4%. The asset being leased cost Mann $180,000 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)...
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)...
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 $49,998 over a six-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 7%. The asset being leased cost Mann $205,000 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)...
Bristol Company leased a machine from Harvard Leasing Company on January 1, 2017. The non-cancellable lease...
Bristol Company leased a machine from Harvard Leasing Company on January 1, 2017. The non-cancellable lease term is 4 years. The following data relate to this lease: 1. Harvard purchased the machine for $363,950 at a cost equal to its fair market value. 2. The economic life of the machine is 6 years with no salvage value at the end of 6 years. 3. Payments are on January 1 of each year starting in 2017 (an annuity due). 4. The...
3. On January 1, 2019, B enters into a 3-year non-cancelable lease agreement for an asset...
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:...
On January 1, 2021, Gemini Corporation leased equipment under a finance lease designed to earn the...
On January 1, 2021, Gemini 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 $240,000 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 $20,000 per year. Insurance premiums of $14,500 annually are related to the equipment. Both amounts were to...
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...
King Company leased equipment from Mann Industries. The lease agreement qualifies as a finance lease and requires annual lease payments of $52,917 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 4%. The asset being leased cost Mann $195,000 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)...
King Company leased equipment from Mann Industries. The lease agreement qualifies as a finance lease and requires annual lease payments of $49,677 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 4%. The asset being leased cost Mann $180,000 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)...
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:...
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