A lease agreement that qualifies as a finance lease calls for annual lease payments of $40,000 over a six-year lease term (also the asset's useful life), with the first payment on January 1, the beginning of the lease. The interest rate is 7%. The lessor's fiscal year is the calendar year. The lessor manufactured this asset at a cost of $191,000, Required: a. Determine the price at which the lessor is "selling" the asset (present value of the lease payments). b. Create a partial amortization table through the second payment on January 1, Year 2 c. What would be the increase in earnings that the lessor would report in its income statement for the first year ended December 31 (gnore taxes)? Note: Use tables, Excel, or a financial calculator. (EV of 51. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Complete this question by entering your answers in the tabs below. Required A Required B Required C Determine the price at which the lessor is "selling the asset (present value of the lease payments). Note: Round your answers to nearest whole number and round percentage answer to 1 decimal place. PV factors based on Table of Calculator function. Lease Payment PV of Lease na
A lease agreement that qualifies as a finance lease calls for annual lease payments of $40,000 over a six-year lease term (also the asset's useful life), with the first payment on January 1, the beginning of the lease. The interest rate is 7%. The lessor's fiscal year is the calendar year. The lessor manufactured this asset at a cost of $191,000, Required: a. Determine the price at which the lessor is "selling" the asset (present value of the lease payments). b. Create a partial amortization table through the second payment on January 1, Year 2 c. What would be the increase in earnings that the lessor would report in its income statement for the first year ended December 31 (gnore taxes)? Note: Use tables, Excel, or a financial calculator. (EV of 51. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Complete this question by entering your answers in the tabs below. Required A Required B Required C Determine the price at which the lessor is "selling the asset (present value of the lease payments). Note: Round your answers to nearest whole number and round percentage answer to 1 decimal place. PV factors based on Table of Calculator function. Lease Payment PV of Lease na
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 12P: Comprehensive Landlord Company and Tenant Company enter into a noncancelable, direct financing lease...
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