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salvage value. Rhyme signed a six-year lease that required six payments of $30.000 due on anary 1 of each year with the first payment due January 1. 2016. The lease was classified as an 3 On Janvary 1, 2016, Rhyme Co leased used equipment with a six year remaining life and no perating lease Rhyme knew the implicit rate. The present value of all of the lease payments s149,781.30. What is the total amount of lease liability (including interest) Rhyme should report (nearest dollar) as of December 31, 2017 (which is one day before the third lease you need to calculate the implicit rate and then the mumber of remaining PMrI and consider how soon is the first one) a. $99,364 b. $107.313 c. $119.781 d. $121,415 e none of the above or below are correct Exhibit 20-2 On January 1, 2016, Mary Company leased equipment, signing a five-year lease that requires annual lease payments of $20,000. The lease qualifies as finance lease. The payments are made at year-end, and the first payment will be made at December 31,2016. In addition, Mary expects the fair value of the equipment at the end of the lease term to be $2,000 but guarantees the residual value to be $10,000 4 Refer to Exhibit 20-2. What is the interest expense associated with the lease obligation for the year ending December 31, 2017 if the implicit rate known to Mary is 12% ? (Round answers to the nearest dollar.) a. $7,823 b. $10,804 c. $7,900 d. $7.290 e. $9,196 5, A lease must be treated as a sales type (i.e capital) by the lessor when at least one of the five basic criteria mentioned in the lecture notes is met if a. the lessee is a financial institution. b. the interest revenue element is determined in such a manner as to produce a constant rate of return on the net investment of the lease. c. the lessor does not have a dealer profit or loss in connection with the property leased. d. the lease agreement contains a provision for unguaranteed residual value. e. none of the above or below are correct Page opyright Congage Learning Powered by Cognero