Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A lease agreement that qualifies as a finance lease calls for annual lease payments of $50,000 over a four-year lease term (also the asset's useful
A lease agreement that qualifies as a finance lease calls for annual lease payments of $50,000 over a four-year lease term (also the asset's useful life), with the first payment at January 1, the beginning of the lease. The interest rate is 7%. The lessor's fiscal year is the calendar year. The lessor manufactured this asset at a cost of $144,000. (FV of $1,PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of \$1) (Use appropriate factor(s) from the tables provided.) Required: a. Determine the price at which the lessor is "selling" the asset (present value of the lease payments). b. Create a partial amortization table through the second payment on January 1, 2017. c. What would be the increase in earnings that the lessor would report in its income statement for the year ended December 31,2016 (ignore taxes)? Complete this question by entering your answers in the tabs below. Determine the price at which the lessor is "selling" the asset (present value of the lease payments). (Round your answers to nearest whole number and round percentage answer to 1 decimal place.) Create a partial amortization table through the second payment on January 1, 2017. (Enter all amounts as positive values. Round your answers to nearest whole number.) What would be the increase in earnings that the lessor would report in its income statement for the year ended December 31 , 2016 (ignore taxes)? (Input decreases to income as negative amounts. Round your answers to nearest whole number.)
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