At January 1, 2023, Tiger Company leased restaurant equipment from Best Corporation under a five-year lease agreement in a finance lease. The lease agreement specifies annual payments of $100.000 beginning January 1, 2023, the beginning of the lease, and at each December 31 thereafter through 2026. The equipment was acquired recently by Best and was expected to have a useful life of six years with no salvage value at the end of its life. Best seeks a 3% return on its lease investments. The amount of lease liability reported on December 31, 2023 balance sheet by Tiger would be: Period O $283,204 O $282861 O $285,861 3% Present Value of Ordinary Annuity of $1 4.57971 541719 6% 4.21236 4.91732 7% 4.10020 4.76654 8% 3.99271 4.62288 3% 4.71710 5.57971 Present Value of Annuity Due of $1 6% 4.46511 5.21236 7% 4.38721 5.10020 8% 4.31213 4.99271

At January 1, 2023, Tiger Company leased restaurant equipment from Best Corporation under a five-year lease agreement in a finance lease. The lease agreement specifies annual payments of $100.000 beginning January 1, 2023, the beginning of the lease, and at each December 31 thereafter through 2026. The equipment was acquired recently by Best and was expected to have a useful life of six years with no salvage value at the end of its life. Best seeks a 3% return on its lease investments. The amount of lease liability reported on December 31, 2023 balance sheet by Tiger would be: Period O $283,204 O $282861 O $285,861 3% Present Value of Ordinary Annuity of $1 4.57971 541719 6% 4.21236 4.91732 7% 4.10020 4.76654 8% 3.99271 4.62288 3% 4.71710 5.57971 Present Value of Annuity Due of $1 6% 4.46511 5.21236 7% 4.38721 5.10020 8% 4.31213 4.99271

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 10MC: On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring...

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On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring payments of 10,000 at the beginning of each year. The machine cost 40,000 and has a useful life of 8 years with no residual value. Kerns implicit interest rate is 10%, and present value factors are as follows: Present value for an annuity due of 1 at 10% for 6 periods4.791 Present value for an annuity due of 1 at 10% for 8 periods5.868 Kern appropriately recorded the lease as a sales-type lease. At the inception of the lease, the Lease Receivable account balance should be: a. 60,000 b. 58,680 c. 48,000 d. 47,910
At January 1, 2024, Café Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement. The lease agreement specifies annual payments of $25,000 beginning January 1, 2024, the beginning of the lease, and on each December 31 thereafter through 2031. The equipment was acquired recently by Crescent at a cost of $171,000 (its fair value) and was expected to have a useful life of 12 years with no salvage value at the end of its life. Because the lease term is only 9 years, the asset does have an expected residual value at the end of the lease term of $4,666. Crescent seeks a 8% return on its lease investments. By this arrangement, the lease is deemed to be a finance lease. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: What will be the effect of the lease on Café Med’s earnings for the first year (ignore taxes)? Note: Enter decreases with negative sign. What will be the…
At January 1, 2024, Café Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement. The lease agreement specifies annual payments of $25,000 beginning January 1, 2024, the beginning of the lease, and on each December 31 thereafter through 2031. The equipment was acquired recently by Crescent at a cost of $180,000 (its fair value) and was expected to have a useful life of 12 years with no salvage value at the end of its life. Because the lease term is only nine years, the asset does have an expected residual value at the end of the lease term of $50,995. Crescent seeks a 10% return on its lease investments. By this arrangement, the lease is deemed to be a finance lease. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: What will be the effect of the lease on Café Med’s earnings for the first year (ignore taxes)? Note: Enter decreases with negative sign. What will be…
At January 1, 2024, Café Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement. The lease agreement specifies annual payments of $25,000 beginning January 1, 2024, the beginning of the lease, and on each December 31 thereafter through 2031. The equipment was acquired recently by Crescent at a cost of $180,000 (its fair value) and was expected to have a useful life of 13 years with no salvage value at the end of its life. Because the lease term is only 9 years, the asset does have an expected residual value at the end of the lease term of $50,995. Crescent seeks a 10% return on its lease investments. By this arrangement, the lease is deemed to be an operating lease. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: What will be the effect of the lease on Café Med’s earnings for the first year (ignore taxes)? Note: Enter decreases with negative sign. What will be…
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On January 1, 2024, Burrito Bill's leased restaurant equipment from Oval Corporation under a nine-year lease agreement. The lease agreement specifies annual payments of $75,000 beginning January 1, 2024, the beginning of the lease, and at each December 31 thereafter through 2028. The equipment was acquired recently by Oval at a cost of $540,000 (its fair value) and was expected to have a useful life of 13 years with no salvage value at the end of its life. (Because the lease term is only 9 years, the asset does have an expected residual value at the end of the lease term of $150,000) Oval seeks a 10% return on its lease investments By this arrangement, the lease is deemed to be an operating lease Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD. of $1 Required: a. What will be the effect of the lease on Burrito Bill's earnings for the first year? (ignore taxes) b. What journal entries will the lessee record during 2024…
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At January 1, 2024, Café Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement. The lease agreement specifies annual payments of $26,000 beginning January 1, 2024, the beginning of the lease, and on each December 31 thereafter through 2031. ● The equipment was acquired recently by Crescent at a cost of $180,000 (its fair value) and was expected to have a useful life of 13 years with no salvage value at the end of its life. • • Because the lease term is only 9 years, the asset does have an expected residual value at the end of the lease term of $21,925. • Crescent seeks a 9% return on its lease investments. By this arrangement, the lease is deemed to be an operating lease. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. What will be the effect of the lease on Café Med's earnings for the first year (ignore taxes)? Note: Enter decreases with negative sign. 2. What…
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