Lease conversion from operating to corporation: A company has borrowing cost of about 4% in 2014...

Lease conversion from operating to corporation:

A company has borrowing cost of about 4% in 2014 and lease balance $4,300.

Year	Payment	Discount Factor	Present Value (4%)	Interest	Lease Obligation	Lease Balance
2013						$4,300
2014		0.9615
2015		0.9246
2016		0.8890
2017		0.8548
2018		0.8219
2019		0.7903
2020		0.7599
2021		0.7307
2022		0.7026
2023		0.6756
2024		0.6496
2025		0.9246

Please calculate the payment, discount factor, PV, interest, lease obligation and lease balance. (show work please)

Solutions

Expert Solution

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Gerbil Leasing Company agrees to lease equipment to Playa Corporation on January 1, 2014. The following...

Gerbil Leasing Company agrees to lease equipment to Playa Corporation on January 1, 2014. The following information relates to the lease agreement. - The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. - The cost of the machinery is $525,000, and the fair value of the asset on January 1, 2014, is $700,000. - At the end of the lease term, the asset reverts to the...

Case 1- Determining Lease Capitalization Amounts Hill Corporation, a diversified manufacturing company, has offices and operating...

Case 1- Determining Lease Capitalization Amounts Hill Corporation, a diversified manufacturing company, has offices and operating locations in major cities throughout the United States. The corporate headquarters for Hill Corporation is located in Chicago, Illinois, and employees connected with various phases of company operations travel extensively. Corporate management is currently evaluating the feasibility of acquiring a business aircraft that can be used by company executives to expedite business travel to areas not adequately served by commercial airlines. Proposals for either...

1. If the Apple corporation sells a bond it is a)borrowing directly from the public b)borrowing...

1. If the Apple corporation sells a bond it is a)borrowing directly from the public b)borrowing indirectly from the public c)selling shares of ownership directly to the public d)selling shares of ownership indirectly to the public 2. The single most important piece of information about a stock is its a)term b)dividend c)daily volume d)price 3. Which of the following lists is included in what economists call "money"? a)cash b)cash and stocks and bonds c)cash and stocks and bonds and real...

On January 1, 2014, Hayes, Inc. leases equipment from Smithsonian Company for an annual lease rental...

On January 1, 2014, Hayes, Inc. leases equipment from Smithsonian Company for an annual lease rental of $25,000. The lease term is five years, and the lessor's interest rate implicit in the lease is 8%. The lessee's incremental borrowing rate is 8.25%. The useful life of the equipment is five years, and its estimated residual value equals its removal cost. Annuity tables indicate that the present value of an annual lease rental of $1 (at 8% rate) is $3.993. The...

On January 1, 2014, Fishbone Corporation sold equipment to Lost Company that cost $250,000 and that...

On January 1, 2014, Fishbone Corporation sold equipment to Lost Company that cost $250,000 and that had accumulated depreciation of $100,000 on the date of sale. Fishbone received as consideration a $240,000 non-interest-bearing note due on December 31, 2016. The prevailing rate of interest for a note of this type on January 1, 2014, was 5% A. Record the 1/1/14 transaction for fishbone corporation and all necessary entries from 2014-2016. B. Record the 1/1/14 transaction for Lost Company and all...

On January 1, 2014, Fishbone Corporation sold equipment to Lost Company that cost $250,000 and that...

On January 1, 2014, Fishbone Corporation sold equipment to Lost Company that cost $250,000 and that had accumulated depreciation of $100,000 on the date of sale. Fishbone received as consideration a non-interest-bearing note requiring payments of $80,000 annually for 3 years. The first note payment is to be made on January 1, 2014. The prevailing rate of interest for a note of this type on January 1, 2014, was 5%. Record the 1/1/14 transaction for Fishbone Corporation and all necessary...

Please provide the Lease Obligation Table for the operating Lease from the Lessee's point of view...

Please provide the Lease Obligation Table for the operating Lease from the Lessee's point of view which has the following contract terms: Refer to the various tables at the end of Chapter 6 of your textbook for all the necessary factors needed to estimate the lease Present Value Is the Lease Term Revised Contract Terms Change from Finance Lease 1 Lease Term 2 years Yes 2 Implied Lease Rate 6% Yes 3 Annual Lease Payment 40,000 Yes Note: the sum...

Rambler Company leased a machine from Basket Leasing Company. The lease is for 4 years. The...

Rambler Company leased a machine from Basket Leasing Company. The lease is for 4 years. The life of the asset is 5 years. The terms of the lease require 4 payments of $100,000 at the beginning of the year, beginning on January 1, 2017. Rambler does not know Basket’s rate. There is an unguaranteed residual value of $15,000 at the end of year 4. At the end of year 4, the equipment is worth $12,000. Rambler also assumes property tax...

Lease Payments Montevallo Corporation leased equipment from Folio Company. The lease term is 10 years, requires...

Lease Payments Montevallo Corporation leased equipment from Folio Company. The lease term is 10 years, requires payments of $25,000 at the end of each year, and contains a bargain purchase option. At the end of the lease, Montevallo has an option to pay $4,000 (which is significantly less than the estimated fair value at that time) to purchase the equipment. The equipment has a fair value at the inception of the lease of $175,000 and an estimated useful life of...

Teal Corporation has signed a 5-year lease for machinery with a cost of $195,000. The asset...

Teal Corporation has signed a 5-year lease for machinery with a cost of $195,000. The asset has an economical life of 9 years with zero salvage value. Annual minimum lease payments made at the end of year are $32,000 and the discount rate is 6%. There is no bargain purchase option available on the lease. Identify whether the machinery should be treated as an operating or capital lease assuming Teal follows ASPE. The machinery should be treated as a(n) .

Subjects