Answered step by step
Verified Expert Solution
Question
1 Approved Answer
1) compute the net annual rental income or rental expense for four years On January 1, 2020. ABC Co. leased a machinery to XYZ Co.
1) compute the net annual rental income or rental expense for four years On January 1, 2020. ABC Co. leased a machinery to XYZ Co. with the following details: Cost of machinery to the lessor 3.760,100 Residual value guarantee 400,000 Annual rental payable at the beginning of each year starting January 1, 2020? Initial direct cost incurred by the lessee 250.000 Useful life and lease term 4 years Implicit interest rate 10% Present value of an annuity due of 1 for 4 years at 10% 3.4869 Present value of 1 for 4 years at 10% 0.6830 At the beginning of 2021, XYZ Co. subleased the equipment to MNO Co. where risk and rewards are substantially transferred to the new lessee, with the following details: Annual rental payable at the end of each year starting December 31, 2021 1,100,000 Initial direct cost incurred by the lessee 250,000 Lease term Implicit interest rate 10% Present value of an ordinary annuity of 1 for 3 years at 10% 2.50 Present value of 1 for 3 years at 10% 0.75 3 years Required: Answer the following under the point of view of ABC, XYZ and MNO Companies
1) compute the net annual rental income or rental expense for four years
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started