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In: Accounting
NutraLabs, Inc., leased a protein analyzer to Werner Chemical, Inc., on September 30, 2018. NutraLabs manufactured...
NutraLabs, Inc., leased a protein analyzer to Werner Chemical, Inc., on September 30, 2018. NutraLabs manufactured the machine at a cost of $5 million. The five-year lease agreement calls for Werner to make quarterly lease payments of $391,548, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2018. NutraLabs’ implicit interest rate is 12%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price at which NutraLabs is “selling” the equipment (present value of the lease payments) at September 30, 2018 2. What pretax amounts related to the lease would NutraLabs report in its balance sheet at December 31, 2018? 3. What pretax amounts related to the lease would NutraLabs report in its income statement for the year ended December 31, 2018? 4. What pretax amounts related to the lease would NutraLabs report in its statement of cash flows for the year ended December 31, 2018?
Solutions
ekkarill92 answered 2 months agoRelated Solutions
NutraLabs, Inc., leased a protein analyzer to Werner Chemical, Inc., on September 30, 2018. NutraLabs manufactured...
NutraLabs, Inc., leased a protein analyzer to Werner Chemical,
Inc., on September 30, 2018. NutraLabs manufactured the machine at
a cost of $4.75 million. The five-year lease agreement calls for
Werner to make quarterly lease payments of $401,337, payable each
September 30, December 31, March 31, June 30, with the first
payment at September 30, 2018. NutraLabs’ implicit interest rate is
12%.
1. Determine the price at which NutraLabs is
“selling” the equipment (present value of the lease payments) at...
Abbott Equipment leased a protein analyzer to Werner Chemical, Inc. on September 30, 2018. Abbott purchased...
Abbott Equipment leased a protein analyzer to Werner Chemical,
Inc. on September 30, 2018. Abbott purchased the machine from
NutraLabs, Inc., at a cost of $6.35 million. The five-year lease
agreement calls for Werner to make quarterly lease payments of
$414,389, payable each September 30, December 31, March 31, June
30, with the first payment at September 30, 2018. Abbot's implicit
interest rate is 16%. (FV of $1, PV of $1, FVA of $1, PVA of $1,
FVAD of $1...
Werner Chemical, Inc., leased a protein analyzer on September 30, 2018. The five-year lease agreement calls...
Werner Chemical, Inc., leased a protein analyzer on September
30, 2018. The five-year lease agreement calls for Werner to make
quarterly lease payments of $417,651, payable each September 30,
December 31, March 31, June 30, with the first payment at September
30, 2018. Werner's incremental borrowing rate is 12%. Amortization
is recorded on a straightline basis at the end of each fiscal year.
The useful life of the equipment is five years. (FV of $1, PV of
$1, FVA of...
Abbott Equipment leased a protein analyzer to Werner Chemical, Inc., on September 30, 2021. Abbott purchased...
Abbott Equipment leased a protein analyzer to Werner Chemical,
Inc., on September 30, 2021. Abbott purchased the machine from
NutraLabs, Inc., at a cost of $6.1 million. The five-year lease
agreement calls for Werner to make quarterly lease payments of
$365,741, payable each September 30, December 31, March 31, and
June 30, with the first payment at September 30, 2021. Abbott's
implicit interest rate is 8%. The useful life of the equipment is
five years. (FV of $1, PV of...
Abbott Equipment leased a protein analyzer to Werner Chemical, Inc., on September 30, 2021. Abbott purchased...
Abbott Equipment leased a protein analyzer to Werner Chemical,
Inc., on September 30, 2021. Abbott purchased the machine from
NutraLabs, Inc., at a cost of $6.1 million. The five-year lease
agreement calls for Werner to make quarterly lease payments of
$365,741, payable each September 30, December 31, March 31, and
June 30, with the first payment at September 30, 2021. Abbott's
implicit interest rate is 8%. The useful life of the equipment is
five years. (FV of $1, PV of...
Werner Chemical, Inc., leased a protein analyzer on September 30, 2021. The five-year lease agreement calls...
Werner Chemical, Inc., leased a protein analyzer on September
30, 2021. The five-year lease agreement calls for Werner to make
quarterly lease payments of $349,133, payable each September 30,
December 31, March 31, and June 30, with the first payment at
September 30, 2021. Werner's incremental borrowing rate is 8%.
Amortization is recorded on a straight-line basis at the end of
each fiscal year. The useful life of the equipment is five years.
(FV of $1, PV of $1, FVA...
Abbott Equipment leased a protein analyzer to Werner Chemical Inc. on September 30,2018. Abbott purchased the...
Abbott Equipment leased a protein analyzer to Werner Chemical
Inc. on September 30,2018. Abbott purchased the machine from
NutraLabs,inc. at a cost of $6.5 million. The five-year lease
agreement calls for Werner to make quarterly lease payments of
$424,177 payable each September 30, December 31, March 31, June 30,
with the first payment at September 30h,2018. Abbott's implicit
interest rate is 16%.
What pretax amounts related to the lease would Abbott report in
its balance sheet at December 31,2018 and...
15-28 Werner Chemical, Inc., leased a protein analyzer on September 30, 2021. The five-year lease agreement...
15-28
Werner Chemical, Inc., leased a protein analyzer on September
30, 2021. The five-year lease agreement calls for Werner to make
quarterly lease payments of $349,133, payable each September 30,
December 31, March 31, and June 30, with the first payment at
September 30, 2021. Werner's incremental borrowing rate is 8%.
Amortization is recorded on a straight-line basis at the end of
each fiscal year. The useful life of the equipment is five years.
(FV of $1, PV of $1,...
On January 1, 2018, Morris Production leased a machine from Werner Leasing under a finance lease....
On January 1, 2018, Morris Production leased a machine from
Werner Leasing under a finance lease. Lease payments are made
annually. Title does not transfer to the lessee and there is no
purchase option or guarantee of a residual value by Morris.
Portions of the Werner Leasing's lease amortization schedule appear
below: Jan. 1 Payments Effective Interest Decrease Outstanding in
Balance Balance 374,596 2018 40,000 40,000 334,596 2018 40,000
33,460 6,540 328,056 2019 40,000 32,806 7,194 320,861 2020 40,000
32,086...
q.32 Wilson Foods Corporation leased a commercial food processor on September 30, 2018. The five-year finance...
q.32
Wilson Foods Corporation leased a commercial food processor on
September 30, 2018. The five-year finance lease agreement calls for
Wilson to make quarterly lease payments of $300,187, payable each
September 30, December 31, March 31, June 30, with the first
payment at September 30, 2018. Wilson’s incremental borrowing rate
is 12%. Wilson records depreciation on a straight-line basis at the
end of each fiscal year. Wilson recorded the lease as
follows:
September 30, 2018
Right-of-use asset (calculated below)
4,600,000...
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