ABC leased a building from XYZ. The lease transfers legal ownership to ABC at lease-end. The present value of lease payments is $275,137 at signing. The useful life of the asset is 10 years and the lease term is 5 years. ABC's amortization expense in year 1 of the lease is
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- 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?BenLin Co. is a lessee under finance lease. The asset is recorded at P4,500,000 and has economic life of 8 years. The lease term is 5 years. The asset is expected to have a fair value of P1,500,000 at the end of 5 years and a fair value of P500,000 at the end of 8 years. The lease agreement provides for the transfer of title of the asset to the lessee at the end of the lease term. What amount of depreciation expense should be recorded for the first year of the lease?White Ltd leased a parcel of land for a period of 10 years. The lease payments required include a payment up-front of $248531, followed by another 9 payments of equal value at the end of every year up to the end of the ninth year. The implicit rate in the lease is 7 percent. What is the value of the right-of-use asset at the commencement of the lease?
- JK Ltd leased equipment to Co. EF for 8 years, at which time the asset will revert to JK Ltd. The equipment cost JK Ltd $16m and has an expected useful life of 12 years. Its selling price is $22.4m. The present value of the lease payments is $20.4m. The first payment was made at the commencement of the lease. Required: How should JK Ltd classify this list and why?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?indicate whether the company has entered into a finance lease oran operating lease. The title is transferred to the lessee. The lessee can purchase the asset for $1 at the end of the lease, and the lease term is five years. The leased asset has an expected useful life of six years.
- Company A leases equipment from Company B in a finance lease. Lease payments of $3,226 are due quarterly over a 10 year period, with the first payment due July 1, the beginning of the lease. The annual interest rate is 8%. What is the outstanding balance in the Lease Payable account after the second payment? What is the outstanding balance in the Right-of-Use asset account after the second payment?A active lease involves obligations that are not evenly distributed over the lease period. That the very first year's rent is $14,000, with a total payment of $120,000 throughout the four lease period. Interest expenditure for the first year is $6,000, relating to the current value of the entire lease payments and the implicit interest rate. For the first year, the right-to-use asset should be amortised as follows: Multiple-choice questions $0 $8,000 $20,000 $24,000Lessee enters into a three year lease of equipment and agrees to make the following annual payments at the end of each year 10,000 in year one, 12,000 in year two and 14,000 in year three. Discount rate is approx. 4, 235% and right of use asset is depreciated on a straight line basis over the lease term. What is the value of the lease liability at the end of years 2 & 3?
- 8. On January 1, 2019, an entity leased a machinery for 4 years which is the same as the useful life of the machinery at annual rental or fixed payment of P120,000. The lease provides for a transfer of ownership of the underlying asset to the lessee at the end of the lease term. The implicit interest rate of the lease is 12%. (Do not round off the PVF). The lease payment is to be made at the end of each year. Determine the noncurrent portion of the lease liability at the end of 2019. (Round off final answer to whole number)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 Liability40,000Sunland Corporation is a lessee with a finance lease. The asset is recorded at $1020000 and has an economic life of 8 years. The lease term is 5 years. The asset is expected to have a fair value of $360000 at the end of 5 years, and a fair value of $130000 at the end of 8 years. The lease agreement provides for the transfer of title of the asset to the lessee at the end of the lease term. What amount of amortization expense would the lessee record for the first year of the lease? $132000 $111250 $178000 $204000