Question

On January 1, 2020, ABC Company leased equipment from ZZ Leasing, Inc.
The terms of the lease require annual payments of $7,500 for ten years
with the first payment due December 31, 2020. The interest rate on the
lease is 3%. Assume that the lease qualifies as a capital lease. ABC
Company uses the double-declining balance method to depreciate its
assets.

Calculate the book value of the leased asset at December 31, 2021.

Use the time value of money factors posted in carmen to answer this
question. To access these factors, click modules and then scroll to
week 12. Click on the link labeled present & future value table
factors. No credit will be awarded for this question using a means
other than these table factors to answer this question.

Future Value of a Lump-Sum 15% 1.5209 1.7490 2.0114 20% 1.7280 2.0736 2.4883 Cauw Periods 2% 3 1.0151 | 1.0202 1.0253 1.0304 1.0355 1.0407 1.0459 1.0511 1.0617 1.0777 16 1.0831 17 1.0885 1.0939 1.0994 1.1049 1.1104 1.1160 1.1216 1.1272 25 1.1328 60 1.3489 3% 1.0927 1.1255 1.1593 1.1941 1.2299 1.2668 1.3048 1.3439 1.4257 1.5580 1.6047 1.6529 1.7024 1.7535 1.8061 1.8603 1.9161 1.9736 2.0325 2.0938 5.8916 Rate of interest per period in percent 5% 6% 8% 9% 10% 12% 1.1576 1.1910 1.2597 1.2950 1.3310 1.4049 1.21551.2625 1.3605 1.4116 1.4641 1.5735 1.2783 1.3382 1.4693 1.5386 1.6105 1.7623 1.3401 1.4185 1.5869 1.6771 1.7716 1.9738 1.4071 1.5036 1.7138 1.8280 1.9487 2.2107 1.4775 1.5940 1.8510 1.9926 2.1436 2.4760 1.5513 1.6895 1.9990 2.1719 2.3579 2.7731 1.6289 1.7909 2.1589 2.3674 2.5938 3.1059 1.7959 2.0122 2.5182 2.8127 3.1384 3.8960 2.0789 2.3966 3.1722 3.6425 4.1773 5.4736 2.1829 2.5404 3.4259 3.9703 4.5950 6.1304 2.2920 2.6928 3.7000 4.3276 5.0545 6.8660 2.4066 2.8543 3.9960 4.7171 5.5599 7.6900 7 6900 2.5270 3.0256 4.3157 5.1417 6.11598.6128 2.6533 3.2071 4.6610 5.6044 6.7275 9.6463 2.7860 3.3996 5.0338 6.1088 7.4002 10.8038 2.9253 3.6035 5.4365 6.6586 8.1403 12.1003 3.0715 3.8197 5.8715 7.25798.9543 13.5523 3.2251 4.04896.3412 7.9111 9.8497 15.1786 3.3864 4.29196.8485 8.6231 10.8347 17.0001 18.6792 32.9877 101.257 176.031 304.482 897.597 2.6600 3.5832 3.0590 4.2998 3.51795.1598 4.0456 6.1917 5.3503 8.9161 8.1371 15.4070 9.3576 18.4884 10.7613 22.1861 123755 12.3755 26.6233 14.2318 31.9480 16.3665 38.3376 18.8215 46.0051 21.6447 55.2061 24.8915 66.2474 28.6252 79.4969 32.9190 95.3962 4383.99 56347.5 สสส Present Value of a Lump-Sum Periods 72% | 0.9852 0.9803 0.9754 0.9657 0.9609 0.9561 10 | 0.9514 0.9419 0.9279 0.9233 Rate of interest per period in percent 3% 5% 6% 8% 9% 10% 0.9151 0.8638 0.8396 0.7938 0.7722 0.7513 0.8885 0.8227 0.7920 0.7350 0.7084 0.6830 0.8626 0.7835 0.7473 0.6806 0.6499 0.6209 .6311 0.5963 0.5645 0.8131 0.7107 0.6651 0.5835 0.5470 0.5132 0.7894 0.6768 0.6274 0.5403 0.5019 0.4665 0.7664 0.6446 0.5919 0.5003 0.4604 0.4241 0.7441 0.6139 0.5584 0.4632 0.4224 0.3855 0.7014 0.5568 0.4970 0.3971 0.3555 0.3186 0.64190.4810 0.4173 0.3152 0.2745 0.2394 0.6232 0.4581 0.3937 0.2919 0.2519 0.2176 0.6050 0.4363 0.3714 0.2703 0.2311 0.1978 0.5874 0.4155 0.3503 0.2503 0.2120 0.1799 0.5703 0.3957 0.3305 0.2317 0.1945 0.1635 0.5537 0.3769 0.3118 0.2146 0.1784 0.1486 0.5375 0.35890.2942 0.1987 0.1637 0.1351 0.5219 0.3418 0.2775 0.18390.1502 0.1228 0.5067 0.3256 0.2618 0.1703 0.1378 0.1117 0.4920 0.3101 0.2470 0.1577 0.1264 0.1015 0.4776 0.2953 0.2330 0.1460 0.1160 0.0923 0.1697 0.0535 0.0303 0.0099 0.0057 0.0033 12% 0.7118 0.6355 0.5674 0.5066 0.4523 0.4039 0.3606 0.3220 0.2567 0.1827 0.1631 0.1456 0.1300 0.1161 0.1037 0.0926 0.0826 0.0738 0.0659 0.0588 0.0011 16 15% 0.6575 0.5718 0.4972 0.4323 0.3759 0.3269 0.2843 0.2472 0.1869 0.1229 0.1069 0.0929 0.0808 0.0703 0.0611 0.0531 0.0462 0.0402 0.0349 0.0304 0.0002 200 0.5787 0.4823 0.4019 0.3349 0.2791 0.2326 0.1938 0.1615 0.1122 0.0649 0.0541 0.0451 0.0376 0.0313 0.0261 0.0217 0.0181 0.0151 0.0126 0.0105 0.0001 18 0.9141 19 0.9096 0.9051 0.9006 0.8961 0.8917 0.8872 0.8828 | 0.7414

Answer 1

solution .. Given data, Annual leaje payments = 7500 Baterest rate : 3% for ten years. feur value of leafld affer = present felue o lease preyments 7500 x cumulative pr factor at 3% for 10 periods. = 7500 * 6. 53020 = $ 63971 Depreciation rate : 10% Depreciation witte at Double-declining method = 2X10 = 20% Depreciation for 2010- $63917x20% .. = $ 12-795 Bork ratue at the beginning of.2011 = $639-71-$12195. = $ 51 182.

Depreciation for 2021 = $51182 X2 07. $ 10236; Book rolue of leased asset at Dec 31,2021 = $51182 & 10236 . . = $ 10946.