Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A lease agreement that qualifies as a finance lease calls for annual lease payments of $20,000 over a five-year lease term (also the asset's useful

image text in transcribedimage text in transcribedimage text in transcribed

A lease agreement that qualifies as a finance lease calls for annual lease payments of $20,000 over a five-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 4%. (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 present value of the lease upon the lease's inception. b. Create a partial amortization through the first payment on January 1, 2017. c. If the lessee's fiscal year is the calendar year, what would be the pretax amounts related to the lease that the lessee would report in its income statement for the first year ended December 31 (ignore taxes)? Complete this question by entering your answers in the tabs below. Required A Required B Required C Determine the present value of the lease upon the lease's inception. (Round your answers to nearest whole number and round percentage answer to 1 decimal place.) PV factors based on Table or Calculator function: Lease Payment n = i = PV of Lease Required A Required B Required C Create a partial amortization through the first payment on January 1, 2017. (Enter all amounts as positive values. Round your answers to nearest whole number.) Date Lease Payment Effective Interest Decrease in balance Outstanding balance 01/01/2016 01/01/2016 01/01/2017 Required A Required B Required C If the lessee's fiscal year is the calendar year, what would be the pretax amounts related to the lease that the lessee would report in its income statement for the first year ended December 31? (Round your answers to nearest whole number.) Impact on pretax income related to the lease: Total expenses

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Financial Accounting Lawrence S C Good Condition ISBN 08512

Authors: S.C. Lawrence

1st Edition

9780851215099

More Books

Students also viewed these Accounting questions

Question

d. How were you expected to contribute to family life?

Answered: 1 week ago