Question

In: Accounting

On January 1, 2020, the first day of its accounting year, Lessor Inc., leased certain equipment...

On January 1, 2020, the first day of its accounting year, Lessor Inc., leased certain equipment at an annual payment of $10,254.19, receivable at the beginning of each year for 10 years. The first payment was received immediately. The equipment has an estimated useful life of 12 years and no residual value. Lessor’s implicit rate is 6%. Lessor had no other costs associated with this lease and properly classified the lease as a sales-type lease. The leased equipment was carried on Lessor Inc.’s books at $65,000.

Required

a. Calculate the value of the lease receivable at the commencement of the lease.

b. What amounts would be presented in the balance sheet as of December 31, 2020, related to this lease?

c. What amounts would be presented in the income statement for the year ended December 31, 2020, related

to this lease?

Solutions

Expert Solution

Please give positive rating your feedback is valuable to me.

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

On January 1, 2020, the first day of its accounting year, Lessor Inc., leased certain equipment...
On January 1, 2020, the first day of its accounting year, Lessor Inc., leased certain equipment at an annual payment of $10,254.19, receivable at the beginning of each year for 10 years. The first payment was received immediately. The equipment has an estimated useful life of 12 years and no residual value. Lessor’s implicit rate is 6%. Lessor had no other costs associated with this lease and properly classified the lease as a sales-type lease. The leased equipment was carried...
On the first day of its fiscal year, Lessor, Inc., leased certain property at an annual...
On the first day of its fiscal year, Lessor, Inc., leased certain property at an annual rental of $100,000 receivable at the beginning of each year for 10 years. The first payment was received immediately. The leased property is new, had cost $650,000, and has an estimated useful life of 13 years with no salvage value. The rate implicit in the lease is 8%. The present value of an annuity of $1 payable at the beginning of the period at...
On January 1, 2020, Suncadia (lessee) leased 100 golf carts from the manufacturer, Yakima Inc. (lessor)...
On January 1, 2020, Suncadia (lessee) leased 100 golf carts from the manufacturer, Yakima Inc. (lessor) for a 7-year period. Pertinent information follows: Lease term is 7 years. The first annual payment of $30,000 is due at the inception of the lease. The remaining annual lease payments are all at 31 December each year. At the end of the lease term, Suncadia can buy the golf carts at a price below the fair value of the golf carts. Suncadia’s year...
On January 1, 2020, Suncadia (lessee) leased 100 golf carts from the manufacturer, Yakima Inc. (lessor)...
On January 1, 2020, Suncadia (lessee) leased 100 golf carts from the manufacturer, Yakima Inc. (lessor) for a 7-year period. Pertinent information follows: Lease term is 7 years. The first annual payment of $30,000 is due at the inception of the lease. The remaining annual lease payments are all at 31 December each year. At the end of the lease term, Suncadia can buy the golf carts at a price below the fair value of the golf carts. Suncadia’s year...
On January 1, 2020, Suncadia (lessee) leased 100 golf carts from the manufacturer, Yakima Inc. (lessor)...
On January 1, 2020, Suncadia (lessee) leased 100 golf carts from the manufacturer, Yakima Inc. (lessor) for a 7-year period. Pertinent information follows: Lease term is 7 years. The first annual payment of $30,000 is due at the inception of the lease. The remaining annual lease payments are all at 31 December each year. At the end of the lease term, Suncadia can buy the golf carts at a price below the fair value of the golf carts. Suncadia’s year...
On January 1, 2020 (the first day of its fiscal year) Vaughn Ltd. acquired a patent...
On January 1, 2020 (the first day of its fiscal year) Vaughn Ltd. acquired a patent which gave the company the right to use a production process. The process met the six criteria for capitalization as an intangible asset. Below is a listing of the events relating to the patent over the five fiscal years from 2020 through 2024: 2020: ● on January 1, acquired the patent for the production process from its inventory for a cash payment of $12,800,000,...
On January 1, 2020 (the first day of its fiscal year) Wildhorse Ltd. acquired a patent...
On January 1, 2020 (the first day of its fiscal year) Wildhorse Ltd. acquired a patent which gave the company the right to use a production process. The process met the six criteria for capitalization as an intangible asset. Below is a listing of the events relating to the patent over the five fiscal years from 2020 through 2024: 2020: ● on January 1, acquired the patent for the production process from its inventory for a cash payment of $17,400,000,...
On January 1, 2019 Lessee Co., leased equipment from Lessor Co. The equipment had a useful...
On January 1, 2019 Lessee Co., leased equipment from Lessor Co. The equipment had a useful life of 6 years, a fair market value of $50,000, and a cost to Lessor Co. of $35,000. Lessor used an implicit interest rate of 7%. The lease is for 6 years, and calls for payments of $8,497 on January 1 of each year beginning January 1, 2019. The residual value of the equipment on December 31, 2024 is estimated to be $10,000, and...
2. On January 1, 2020, Firm Lessor leased a building to Firm Lessee. The relevant information...
2. On January 1, 2020, Firm Lessor leased a building to Firm Lessee. The relevant information related to the lease is as follows. 1) The lease arrangement is for 2 years. 2) Equal rental payments are due on January 1 of each year, beginning in 2020. 3) The building’s fair value at commencement of the lease is $100,000. The building is depreciated on a straight-line basis. Its estimated economic life is 4 years with salvage value of $25,000 at the...
On January 1, 2020, Firm ABC (lessor) leased a building to Firm XYZ (lessee). The relevant...
On January 1, 2020, Firm ABC (lessor) leased a building to Firm XYZ (lessee). The relevant information related to the lease is as follows. 1) The lease arrangement is for 3 years. 2) The building’s cost and fair value at commencement of the lease is $60,000. The building is depreciated on a straight-line basis. Its estimated economic life is 5 years with salvage value of $12,000 at the end of the lease. The residual value after 5 years is assumed...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT