Suppose Sammy agrees to a 8 year lease of equipment at a cost of $75,000 and an interest rate of 7.7%. What is the value of this asset on the balance sheet when he signs the lease? OA. $0 O B. $45,000.00 OC. $75,000 OD. $85.776.25
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- 19. On January 2, 2022, Sylvester Metals Co. leased a mining machine from EDH Leasing Corp. Assume the lease qualifies as an operating lease under ASPE standards. The annual payments are $4,000 paid at the end of each year, and the life of the lease is 10 years. What entry would Sylvester make when the machine is delivered by EDH? a. Leased Assets40,000 Lease Liability40,000 b. Leased Assets40,000 Prepaid Rent40,000 c.No entry is necessary. d. Prepaid Rent40,000 Lease Liability40,000Calculate minimum lease payments for A Ltd. who took an asset on a 5 years lease from B Ltd. using the following information: Payments over the lease term Contingent rent Cost for services given by B Ltd. Taxes to be reimbursed to B Ltd. Residual value guaranteed by A Ltd. Fair value of asset after 5 years 1,000 per month *20,000 40,000 15,000 5,000 6,000 Also, A Ltd. has an option to purchase the asset after a period of 5 years at 2,000. It is reasonably certain that A Ltd. will exercise the option. Required Calculation Minimum Lease Payments.11. On 1 July 2020, Sami Ltd leased a machine from Jimmy Ltd. The machine cost Jimmy Ltd OMR1,300,000 to manufacture and had a fair value of OMR1,541,090 on 1 July 2020. The lease agreement contained the following provisions: Lease term |4 years |Annual rental payment, in advance on 1 July each year OMR 415,000| Residual value at end of the lease term Residual guaranteed by lessee Interest rate implicit in lease The lease is cancellable only with the permission of the lessor. OMR 150,000 nil 8% The expected useful life of the machine is 6 years. Sami Ltd intends to return the machine to the lessor at the end of the lease term. Included in the annual rental payment is an amount of OMR15,000 to cover the costs of maintenance and insurance paid for by the lessor. Required A. Prepare the lease payment schedule for the lessee (show all workings); and B. Prepare the lease receipt schedule for the lessor (show all workings)
- Jenny Limited leases a machine with a fair value of P109,444 to Rose Limited for 5 years at an annual rental of P25,000 payable in advance and Rose Limited guarantees in full the estimated residual value of P15,000 on return of the asset. 1. What would be the interest rate implicit in the lease?On January 1, 20x1, Entity Y leases out a piece of equipment to Entity X. Information on the lease is as follows: Lease term 3 years Annual rent payable at the end of each year 100,000 Interest rate implicit in the lease 10% The lease provides for the transfer of ownership of the equipment to the lessee at the end of the lease term. What total amount of finance income will Entity Y recognize over the lease term?Billy Limited (lessee) and Bob Limited (lessor) enter into a finance lease agreement on 1 July 2022 with the following terms: ⚫ lease term is 4 years • estimated economic life of the leased asset is 6 years 4 × annual rental payments of $15,000 each payable in arrears ⚫ residual value at the end of the lease term is not guaranteed to be $20,000 ⚫ esitmated fair value of the leased asset at the end of the lease term to be $18,000 ⚫ interest rate implicit in the lease is 8%. Billy Ltd intends to return the asset to Bob Ltd at the end of lease term Required: What is the initial lease liability that Billy Ltd needs to recognise at the lease commencement date? $49 682 $64 383 $62 912 $51 152
- 18. Which of the following lease conditions would result in a finance lease to the lessee? a.The fair market value of the property at the inception of the lease is $18,000; the present value of the minimum lease payments is $16,000. b.The lease term is 70% of the property's economic life. c.The lessee will return the property to the lessor at the end of the lease term. d.The lessee can purchase the property for $1 at the end of the lease term.Q25 Chad Ltd negotiated a lease on the following terms: the term of the lease was 5 years; the estimated useful life of the leased equipment was 10 years; the purchase price was R60 000; and the annual lease payment was R5 000. This lease should be classified as_____. Select one: a. A finance lease b. neither operating nor finance lease c. An operating lease d. a financial leaseFact pattern On January 1, 2019, Lessee enters into a 4-year lease of an asset for an annual rent of P10,000 payable at the beginning of each year. The interest rate implicit in the lease is 10% while the lessee's incremental borrowing rate is 12%. 9. The initial measurement of the right-of-use asset is determined as follows: P10,000 x PV of an ordinary annuity of P1 @10%, n=4. 10. The initial measurement of the lease liability is determined as follows: P10,000 x PV of an annuity due of P1 @10%, n=4.
- 5. ABC leases an asset from XYZ, a lease financier, with the following terms: Lease Commencement – January 1, 2021 Lease term - 5 Annual rental for the first 3 years - P250,000 and 300,000 for the remaining 2 years Discount rate is 10% Initial direct cost – 130,500 The initial direct cost is shouldered by ABC fully. The useful life of the leased property is 6 years. The asset will revert to the lessor at the end of the lease term. However, at the end of year 4, ABC actually purchased from XYZ at P300,000. QUESTION: How much should ABC record the asset as a result of the actual purchase of the lease asset?O e. $300,000 Jestion 3 For an operating lease, which statement is TRUE? ot yet swered Select one: ints out of O a. The Right of Use asset amortization amount will decrease each year. O b. Annual Lease Expense will be the amortization of the Right of Use asset less that year's interest expense. Flag question Oc. The recorded Lease Expense amount will be the same each year. O d. The annual amortization of the Right of Use asset will be debited to Amortization Expense each year. O e. To compute the cost of the Right of Use asset, the lessee will use the incremental rate, if known. estion 4 Indicate the type of Deferred Tax account created by Unearned Revenues and Accrued Revenues, respectively: yet wered Select one: nts out of O a. Asset, Asset O b. Liability, Asset O c.Asset, Liability O d. Liability, Liability Flag question stion 5 Which of the following requires intraperiod tax allocation? yet wered Select one: nts out of O a. Discontinued Operations Loss O b. Estimated Warranty…MN.17. On 1 July 2020 Jane Ltd (lessor) leased equipment to Austin Ltd (Lessee). The equipment had a fair value of $369,824. This was also the present value of the lease payments .The lease agreement contained the following details: Lease term 5 years Economic life 6 years Annual rental payment in arrears commencing 30June 2021 $90,000 Residual Value at end of lease term $80,000 Residual Value guaranteed by lessee 80,ooo Interest rate implicit in lease 12% Lease is cancellable with permission of lessor, Jane Ltd .Lease is classified as a finance Lease by the Lessor . Required: (a)Prepare the Lease payment schedule for Austin Ltd, Lessee, for the first two years, for the year ended 30 June 2021 and for the year ended 30 June 2022.