Concord Dairy Ltd. leases its milk cooling equipment from Bridgeport Finance Corporation. Both companies use IFRS 16. The lease has the following terms. 1. 2. The lease is dated May 30, 2020, with a lease term of eight years. It is non-cancellable and requires equal rental payments of $30,700 due each May 30, beginning in 2020. The equipment has a fair value and cost at the inception of the lease of $216,635, an estimated economic life of 10 years, and a residual value (which is guaranteed by Lanier Dairy) of $23,200. The lease contains no renewal options and the equipment reverts to Bridgeport Finance Corporation on termination of the lease. 3. 4. 5. Concord Dairy's incremental borrowing rate is 6% per year; the implicit rate is also 6%. Concord Dairy uses straight-line depreciation for similar equipment that it owns. Collectibility of the payments is reasonably predictable, and there are no important uncertainties about costs that have not yet been incurred by the lessor. 6. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. TABLE PV.1 Present Value of 1 (n) periods 2 3 4 5 6 7 8 9 10 2% 242% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 15% 0.98039 0.97561 0.97087 0.96156 0.95238 0.94340 0.93458 0.92593 0.91743 0.90909 0.90090 0.89286 0.86957 0.96117 0.95181 0.94260 0.92456 0.90703 0.89000 0.87344 0.85734 0.84168 0.82645 0.81162 0.79719 0.75614 0.94232 0.92860 0.91514 0.88900 0.86384 0.83962 0.81630 0.79383 0.77218 0.75132 0.73119 0.71178 0.65752 0.92385 0.90595 0.88849 0.85480 0.82270 0.79209 0.76290 0.73503 0.70843 0.68301 0.65873 0.63552 0.57175 0.90583 0.88385 0.86261 0.82193 0.78353 0.74726 0.71299 0.68058 0.64993 0.62092 0.59345 0.56743 0.49718 0.88797 0.86230 0.83748 0.79031 0.74622 0.70496 0.66634 0.63017 0.59627 0.56447 0.53464 0.50663 0.43233 0.87056 0.84127 0.81309 0.75992 0.71068 0.66506 0.62275 0.58349 0.54703 0.51316 0.48166 0.45235 0.37594 0.85349 0.82075 0.78941 0.73069 0.67684 0.62741 0.58201 0.54027 0.50187 0.46651 0.43393 0.40388 0.32690 0.83676 0.80073 0.76642 0.70259 0.64461 0.59190 0.54393 0.50025 0.46043 0.42410 0.39092 0.36061 0.28426 0.82035 0.78120 0.74409 0.67556 0.61391 0.55839 0.50835 0.46319 0.42241 0.38554 0.35218 0.32197 0.24719 0.80426 0.76214 0.72242 0.64958 0.58468 0.52679 0.47509 0.42888 0.38753 0.35049 0.31728 0.28748 0.21494 0.78849 0.74356 0.70138 0.62460 0.55684 0.49697 0.44401 0.39711 0.35554 0.31863 0.28584 0.25668 0.18691 0.77303 0.72542 0.68095 0.60057 0.53032 0.46884 0.41496 0.36770 0.32618 0.28966 0.25751 0.22917 0.16253 0.75788 0.70773 0.66112 0.57748 0.50507 0.44230 0.38782 0.34046 0.29925 0.26333 0.23199 0.20462 0.14133 0.74301 0.69047 0.64186 0.55526 0.48102 0.41727 0.36245 0.31524 0.27454 0.23939 0.20900 0.18270 0.12289 0.72845 0.67362 0.62317 0.53391 0.45811 0.39365 0.33873 0.29189 0.25187 0.21763 0.18829 0.16312 0.10687 0.71416 0.65720 0.60502 0.51337 0.43630 0.37136 0.31657 0.27027 0.23107 0.19785 0.16963 0.14564 0.09293 0.70016 0.64117 0.58739 0.49363 0.41552 0.35034 0.29586 0.25025 0.21199 0.17986 0.15282 0.13004 0.08081 0.68643 0.62553 0.57029 0.47464 0.39573 0.33051 0.27651 0.23171 0.19449 0.16351 0.13768 0.11611 0.07027 0.67297 0.61027 0.55368 0.45639 0.37689 0.31180 0.25842 0.21455 0.17843 0.14864 0.12403 0.10367 0.06110 11 12 13 14 15 16 17 18 19 20 Financial Calculators Present values can also be calculated using financial calculators. A financial calculator will perform the same calculation as a basic calculator, but it requires fewer steps and less input. Basically, with a financial calculator, you input the future value, the discount rate, and the number of periods, and then tell it to calculate the present value. Illustration 3.10 shows the required inputs for a present value calculation using a financial calculator. PV ? Yield ($952.38) I 5% N FV $1,000 PMT o 1 Table A.5 PRESENT VALUE OF AN ANNUITY DUE OF 1 1- PVF-AD.,-1+ i 5% 6% (n) periods 1 2 3 4 5 2% 1.00000 1.98039 2.94156 3.88388 4.80773 242% 3% 1.00000 1.00000 1.97561 1.97087 2.92742 2.91347 3.85602 3.82861 4.76197 4.71710 1.00000 1.00000 1.96154 1.95238 2.88609 2.85941 3.77509 3.72325 4.62990 4.54595 1.00000 1.94340 2.83339 3,67301 4.46511 8% 9% 1.00000 1.00000 1.92593 1.91743 2.78326 2.75911 3.57710 3.53130 4.31213 4.23972 10% 11% 12% 15% 1.00000 100000 1.00000 1.00000 1.90909 1.90090 1.89286 1.86957 2.73554 2.71252 2.69005 2.62571 3.48685 3.44371 3.40183 3.28323 4.16986 4.10245 4.03735 3.85498 6 7 8 9 10 5.71346 6.60143 7.47199 8.32548 9.16224 5.64583 6.50813 7.34939 8.17014 8.97087 5.57971 6.41719 7.23028 8.01969 8.78611 5.45182 5.32948 6.24214 6.07569 7.00205 6.78637 7.73274 7.46321 8.43533 8.10782 5.21236 5.91732 6.58238 7.20979 7.80169 4.99271 5.62288 6.20637 6.74664 7.24689 4.88965 5.48592 6.03295 6.53482 6.99525 4.79079 4.69590 4.60478 4.35216 5.35526 5.23054 5.11141 4.78448 5.86842 5.71220 5.56376 5.16042 6.33493 6.14612 5.96764 5.48732 6.75902 6.53705 6.32825 5.77158 11 12 13 14 15 9.98259 9.75206 9.53020 9.11090 8.72173 8.36009 7.71008 7.41766 7.14457 6.88923 6.65022 6.01877 10.78685 10.51421 10.25262 9.76048 9.30641 8.88687 8.13896 7.80519 7.49506 7.20652 6.93770 6.23371 11.57534 11.25776 10.95400 10.38507 9.86325 9.38384 8.53608 8.16073 7.81369 7.49236 7.19437 6.42062 12.34837 11.98319 11.63496 10.98565 10.39357 9.85268 8.90378 8.48690 8.10336 7.74987 7.42355 6.58315 13.10625 12.69091 12 29607 11.56312 10.89864 10.29498 9.24424 8.78615 9.36669 7.98187 7.62817 6.72448 13.84926 13.38138 12.93794 12.11839 11.37966 10.71225 9.55948 9.06069 8.60608 8.19087 7.81086 6.84737 14.57771 14.05500 13.56110 12.65230 11.83777 11.10590 9.85137 9.31256 8.82371 8.37916 7.97399 6.95424 15.29187 14.71220 14.16612 13.16567 12.27407 11.47726 10.12164 9.54363 9.02155 8.54879 8.11963 7.04716 15.99203 15.35336 14.75351 13.65930 12.68959 11.82760 10.37189 9.75563 9.20141 8.70162 8.24967 7.12797 16.67846 15.97899 15.32380 14.13394 13.08532 12.15812 10.60360 9.95012 9.36492 8.83929 8.36578 7.19823 16 17 18 19 20 21 22 23 24 25 17.35143 16.58916 15.87747 14.59033 13.46221 12.46992 10.81815 10.12855 9.51356 8.96333 8.46944 7.25933 18.01121 17.18455 16.41502 15.02916 13.82115 12.76408 11.01680 10.29224 9.64869 9.07507 8.56200 7.31246 18.65805 17.76541 16.93692 15.45112 14.16300 13.04158 11.20074 10.44243 9.77154 9.17574 8.64465 7.35866 19.29220 18.33211 17.44361 15.85684 14.48857 13.30338 11.37106 10.58021 9.88322 9.26643 8.71843 7.39884 19.91393 18.88499 17.93554 16.24696 14.79864 13.55036 11.52876 10.70661 9.98474 9.34814 8.78432 7.43377 20.52346 19.42438 18.41315 16.62208 15.09394 13.78336 11.67478 10.82258 10.07704 9.42174 8.84314 7.46415 21.12104 19.95061 18.87684 16.98277 15.37519 14.00317 11.80998 10.92897 10.16095 9.48806 8.89566 7.49056 21.70690 20.46401 19.32703 17.32959 15.64303 14.21053 11.93518 11.02658 10.23722 9.54780 8.94255 7.51353 22.28127 20.96489 19.76411 17.66306 15.89813 14.40616 12.05108 11.11613 10.30657 9.60162 8.98442 7.53351 22.84438 21.45355 20.18845 17.98371 16.14107 14.59072 12.15841 11.19828 10.36961 9.65011 9.02181 7.55088 26 27 28 29 30 31 32 33 34 35 23.39646 21.93029 20.60044 18.29203 16.37245 14.76483 12.25778 11.27365 10.42691 9.69379 9.05518 7.56598 23.93770 22.39541 21.00043 18.58849 16.59281 14.92909 12.34980 11.34280 10.47901 9.73315 9.08499 7.57911 24.46833 22.84918 21.38877 18.87355 16.80268 15.08404 12.43500 11.40624 10.52638 9.76860 9.11159 7.59053 24.98856 23.29188 21.76579 19.14765 17.00255 15.23023 12.51389 11.46444 10.56943 9.80054 9.13535 7.60046 25.49859 23.72379 22.13184 19.41120 17.19290 15.36814 12.58693 11.51784 10.60858 9.82932 9.15656 7.60910 36 37 38 39 40 25.99862 24.14516 22.48722 19.66461 17.37419 15.49825 12.65457 11.56682 10.64416 9.85524 9.17550 7.61661 26.48884 24.55625 22.83225 19.90828 17.54685 15.62099 12.71719 11.61176 10.67651 9.87859 9.19241 7.62314 26.96945 24.95732 23.16724 20.14258 17.71129 15.73678 12.77518 11.65299 10.70592 9.89963 9.20751 7.62882 27.44064 25.34860 23.49246 20.36786 17.86789 15.84602 12.82887 11.69082 10.73265 9.91859 9.22099 7.63375 27.90259 25.73034 23.80822 20.58448 18.01704 15.94907 12.87858 11.72552 10.75697 9.93567 9.23303 7.63805 Table 1.4 PRESENT VALUE OF AN ORDINARY ANNUITY OF 1 1 PVF-04- (1+i) 1 242% 3% 5% 6% in) periods 1 2 3 4 5 WN 2% 98039 1.94156 2.88388 3.80773 4.71346 .97561 1.92742 2.85602 3.76197 4.64583 .97087 1.91347 2.82861 3.71710 4.57971 96154 1.88609 2.77509 3.62990 4.45182 .95238 1.85941 2.72325 3.54595 4.32948 94340 1.83339 2.67301 3.46511 4.21236 8% 9% 10% 11% 12% 15% 92593 91743 .90909 90090 .89286 .86957 1.78326 1.75911 1.73554 1.71252 1.69005 1.62571 2.57710 2.53130 2.48685 2.44371 2.40183 2.28323 3.31213 3.23972 3.16986 3.10245 3.03735 2.85498 3.99271 3.88965 3.79079 3.69590 3.60478 3.35216 6 7 8 9 10 5.60143 6.47199 7.32548 8.16224 8.98259 5.50813 6.34939 7.17014 7.97087 8.75206 5.41719 5.24214 5.07569 6.23028 6.00205 5.78637 7.01969 6.73274 6.46321 7.78611 7.43533 7.10782 8.53020 8.11090 7.72173 4.91732 5.58238 6.20979 6.80169 7.36009 4.62288 4.48592 4.35526 4.23054 4.11141 3.78448 5.20637 5,03295 4.86842 4.71220 4,56376 4.16042 5.74664 5.53482 5.33493 5.14612 4.96764 4.48732 6.24689 5.99525 5.75902 5.53705 5.32825 4.77158 6.7100B 6.41766 6.14457 5.88923 5.65022 5,01877 11 12 13 14 15 9.78685 9.51421 9.25262 8.76048 8.30641 7.88687 10.57534 10.25776 9.95400 9.38507 8.86325 8.38384 11.34837 10.98319 10.63496 9.98565 9.39357 8.85268 12.10625 11.69091 11.29607 10.56312 9.89864 9.29498 12.84926 12.38138 11.93794 11.11839 10.37966 9.71225 7.13896 6.80519 6.49506 6.20652 5.93770 5.23371 7.53608 7.16073 6.81369 6.49236 6.19437 5.42062 7.90378 7.48690 7.10336 6.74987 6.42355 5.58315 8.24424 7.78615 7.36669 6.98187 6.62817 5.72448 8.55948 8.06069 7.60608 7.19087 6.81086 5.84737 16 17 18 19 20 13.57771 13.05500 12.56110 11.65230 10.83777 10.10590 14.29187 13.71220 13.16612 12.16567 11.27407 10.47726 14.99203 14.35336 13.75351 12.65930 11.68959 10.82760 15.67846 14.97889 14.32380 13.13394 12.08532 11.15812 16.35143 15.58916 14.87747 13.59033 12.46221 11.46992 8.85137 8.31256 7.82371 7.37916 6.97399 5.95424 9.12164 8.54363 8.02155 7.54879 7.11963 6.04716 9.37189 8.75563 8.20141 7.70162 7.24967 6.12797 9.60360 8.95012 8.36492 783929 7.36578 6.19823 9.81815 9.12855 8.51356 7.96333 7.46944 6.25933 21 22 23 24 25 17.01121 16.18455 15.41502 14.02916 12.82115 11.76408 10.01680 9.29224 8.64869 8.07507 7.56200 6.31246 17.65805 16.76541 15.93692 14.45112 13.16800 12.04158 10.20074 9.44243 8.77154 8.17574 7.64465 6.35866 18.29220 17.33211 16.44361 14.85684 13.48857 12.30338 10.37106 9.58021 8.88322 8.26643 7.71843 6.39884 18.91393 17.88499 16.93554 15.24696 13.79864 12.55036 10.52876 9.70661 8.98474 8.34814 7.78432 6.43377 19.52346 18.42438 17.41315 15.62208 14.09394 12.78336 10.67478 9.82258 9.07704 8.42174 7.84314 6.46415 upBB EngDa 26 27 28 20.12104 18.95061 17.87684 15.98277 14.37519 13.00317 10.80998 9.92897 9.16095 8.48806 7.89566 6.49056 20.70690 19.46401 18.32703 16.32959 14.64303 13.21053 10.93516 10.02658 9.23722 8.45780 7.94255 6.51353 21.28127 19.96489 18.76411 16.66306 14.89813 13.40616 11.05108 10.11613 9.30657 8.60162 7.98442 6.53351 21.84438 20.45355 19.18845 16.98371 15.14107 13.59072 11.15841 10.19828 9.36961 8.65011 8.02181 6.55088 22.39646 20.93029 19.60044 17.29203 15.37245 13.76483 11.25778 10.27365 9,42691 8.69379 8.05518 6.56598 30 31 32 33 34 35 22.93770 21.39541 20.00043 17.58849 15.59281 13.92909 11.34980 10.34280 9.47901 8.73315 8.08499 6.57911 23.46833 21.84918 20.38877 17.87355 15.80268 14.08404 11.43500 10.40624 9.52638 8.76860 8.11159 6.59053 23.98856 22.29188 20.76579 18.14765 16.00255 14.23023 11.51389 10.46444 9.56943 8.80054 8.13535 6.60046 24.49859 22.72379 21.13184 18.41120 16.19290 14.36814 11.58693 10.51784 9.60858 8.82932 8.15656 6.60910 24.99862 23.14516 21.48722 18.66461 16.37419 14.49825 11.65457 10.56682 9.64416 8.85524 8.17550 6.61661 36 37 38 39 40 25,48884 23.55625 21.83225 18.90828 16.54685 14.62099 11.71719 10.61176 9.67651 8.87859 8.19241 6.62314 25.96945 23.95732 22.16724 19.14258 16.71129 14.73678 11.77518 10.65299 9.70592 8.89963 8.20751 6.62882 26.44064 24.34860 22.49246 19.36786 16.86789 14.84602 11.82887 10.69082 9.73265 8.91859 8.22099 6.63375 26.90259 24.73034 22.80822 19.58448 17.01704 14.94907 11.87858 10.72552 9.75697 8.93567 8.23303 6.63805 27.35548 25.10278 23.11477 19.79277 17.15909 15.04630 11.92461 10.75736 9.77905 8.95105 8.24378 6.64178 Using tables, a financial calculator, or Excel functions, calculate the PV of the lease payments and guaranteed residual value under the lease. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 5,275.) PV of the lease payments and guaranteed residual value $ List of Accounts Prepare the journal entries for the lessee and lessor at May 30, 2020, and at December 31, 2020, which is the lessee's and lessor's year end. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275.) Lessee: Date Account Titles and Explanation Debit Credit May 30, 2020 (To record inception of lease and first payment.) Dec. 31, 2020 Dec. 31, 2020 (To record depreciation expense.) Lessor: Date Account Titles and Explanation Debit Credit May 30, 2020 (To record inception of lease.) May 30, 2020 (Collection of lease payment.) Dec. 31, 2020 (To record interest.) Prepare the journal entries at May 30, 2021 for the lessee and lessor. Assume reversing entries are not used. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to 0 decimal places, e.g. 5,275.) Lessee: Date Account Titles and Explanation Debit Credit May 30, 2021 (To record lease payment.) Lessor: Date Account Titles and Explanation Debit Credit May 30, 2021 (To record interest.) May 30, 2021 (Collection of lease payment.) What amount would have been capitalized by the lessee upon inception of the lease if: (Round answers to O decimal places, e.g. 5,275.) 1. The residual value of $23,200 had been guaranteed by a third party, not the lessee? $ $ 2. The residual value of $23,200 had not been guaranteed at all? $ List of Accounts On the lessor's books, what amount would be recorded as the net investment at the inception of the lease, assuming: (Round answers to O decimal places, e.g. 5,275.) 1. Bridgeport Finance had incurred $1,200 of direct costs in processing the lease? $ . 2. The residual value of $23,200 had been guaranteed by a third party? $ 3. The residual value of $23,200 had not been guaranteed at all? $ $ Assume that the milk cooling equipment's useful life is 20 years. How large would the residual value have to be at the end of eight years in order for the lessee to qualify for the operating method assuming ASPE applies? Assume that the residual value would be guaranteed by a third party. (Hint: The lessee's annual payments will be appropriately reduced as the residual value increases.) (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 5,275.) The residual value would have had to be greater than $ List of Accounts Concord Dairy Ltd. leases its milk cooling equipment from Bridgeport Finance Corporation. Both companies use IFRS 16. The lease has the following terms. 1. 2. The lease is dated May 30, 2020, with a lease term of eight years. It is non-cancellable and requires equal rental payments of $30,700 due each May 30, beginning in 2020. The equipment has a fair value and cost at the inception of the lease of $216,635, an estimated economic life of 10 years, and a residual value (which is guaranteed by Lanier Dairy) of $23,200. The lease contains no renewal options and the equipment reverts to Bridgeport Finance Corporation on termination of the lease. 3. 4. 5. Concord Dairy's incremental borrowing rate is 6% per year; the implicit rate is also 6%. Concord Dairy uses straight-line depreciation for similar equipment that it owns. Collectibility of the payments is reasonably predictable, and there are no important uncertainties about costs that have not yet been incurred by the lessor. 6. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. TABLE PV.1 Present Value of 1 (n) periods 2 3 4 5 6 7 8 9 10 2% 242% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 15% 0.98039 0.97561 0.97087 0.96156 0.95238 0.94340 0.93458 0.92593 0.91743 0.90909 0.90090 0.89286 0.86957 0.96117 0.95181 0.94260 0.92456 0.90703 0.89000 0.87344 0.85734 0.84168 0.82645 0.81162 0.79719 0.75614 0.94232 0.92860 0.91514 0.88900 0.86384 0.83962 0.81630 0.79383 0.77218 0.75132 0.73119 0.71178 0.65752 0.92385 0.90595 0.88849 0.85480 0.82270 0.79209 0.76290 0.73503 0.70843 0.68301 0.65873 0.63552 0.57175 0.90583 0.88385 0.86261 0.82193 0.78353 0.74726 0.71299 0.68058 0.64993 0.62092 0.59345 0.56743 0.49718 0.88797 0.86230 0.83748 0.79031 0.74622 0.70496 0.66634 0.63017 0.59627 0.56447 0.53464 0.50663 0.43233 0.87056 0.84127 0.81309 0.75992 0.71068 0.66506 0.62275 0.58349 0.54703 0.51316 0.48166 0.45235 0.37594 0.85349 0.82075 0.78941 0.73069 0.67684 0.62741 0.58201 0.54027 0.50187 0.46651 0.43393 0.40388 0.32690 0.83676 0.80073 0.76642 0.70259 0.64461 0.59190 0.54393 0.50025 0.46043 0.42410 0.39092 0.36061 0.28426 0.82035 0.78120 0.74409 0.67556 0.61391 0.55839 0.50835 0.46319 0.42241 0.38554 0.35218 0.32197 0.24719 0.80426 0.76214 0.72242 0.64958 0.58468 0.52679 0.47509 0.42888 0.38753 0.35049 0.31728 0.28748 0.21494 0.78849 0.74356 0.70138 0.62460 0.55684 0.49697 0.44401 0.39711 0.35554 0.31863 0.28584 0.25668 0.18691 0.77303 0.72542 0.68095 0.60057 0.53032 0.46884 0.41496 0.36770 0.32618 0.28966 0.25751 0.22917 0.16253 0.75788 0.70773 0.66112 0.57748 0.50507 0.44230 0.38782 0.34046 0.29925 0.26333 0.23199 0.20462 0.14133 0.74301 0.69047 0.64186 0.55526 0.48102 0.41727 0.36245 0.31524 0.27454 0.23939 0.20900 0.18270 0.12289 0.72845 0.67362 0.62317 0.53391 0.45811 0.39365 0.33873 0.29189 0.25187 0.21763 0.18829 0.16312 0.10687 0.71416 0.65720 0.60502 0.51337 0.43630 0.37136 0.31657 0.27027 0.23107 0.19785 0.16963 0.14564 0.09293 0.70016 0.64117 0.58739 0.49363 0.41552 0.35034 0.29586 0.25025 0.21199 0.17986 0.15282 0.13004 0.08081 0.68643 0.62553 0.57029 0.47464 0.39573 0.33051 0.27651 0.23171 0.19449 0.16351 0.13768 0.11611 0.07027 0.67297 0.61027 0.55368 0.45639 0.37689 0.31180 0.25842 0.21455 0.17843 0.14864 0.12403 0.10367 0.06110 11 12 13 14 15 16 17 18 19 20 Financial Calculators Present values can also be calculated using financial calculators. A financial calculator will perform the same calculation as a basic calculator, but it requires fewer steps and less input. Basically, with a financial calculator, you input the future value, the discount rate, and the number of periods, and then tell it to calculate the present value. Illustration 3.10 shows the required inputs for a present value calculation using a financial calculator. PV ? Yield ($952.38) I 5% N FV $1,000 PMT o 1 Table A.5 PRESENT VALUE OF AN ANNUITY DUE OF 1 1- PVF-AD.,-1+ i 5% 6% (n) periods 1 2 3 4 5 2% 1.00000 1.98039 2.94156 3.88388 4.80773 242% 3% 1.00000 1.00000 1.97561 1.97087 2.92742 2.91347 3.85602 3.82861 4.76197 4.71710 1.00000 1.00000 1.96154 1.95238 2.88609 2.85941 3.77509 3.72325 4.62990 4.54595 1.00000 1.94340 2.83339 3,67301 4.46511 8% 9% 1.00000 1.00000 1.92593 1.91743 2.78326 2.75911 3.57710 3.53130 4.31213 4.23972 10% 11% 12% 15% 1.00000 100000 1.00000 1.00000 1.90909 1.90090 1.89286 1.86957 2.73554 2.71252 2.69005 2.62571 3.48685 3.44371 3.40183 3.28323 4.16986 4.10245 4.03735 3.85498 6 7 8 9 10 5.71346 6.60143 7.47199 8.32548 9.16224 5.64583 6.50813 7.34939 8.17014 8.97087 5.57971 6.41719 7.23028 8.01969 8.78611 5.45182 5.32948 6.24214 6.07569 7.00205 6.78637 7.73274 7.46321 8.43533 8.10782 5.21236 5.91732 6.58238 7.20979 7.80169 4.99271 5.62288 6.20637 6.74664 7.24689 4.88965 5.48592 6.03295 6.53482 6.99525 4.79079 4.69590 4.60478 4.35216 5.35526 5.23054 5.11141 4.78448 5.86842 5.71220 5.56376 5.16042 6.33493 6.14612 5.96764 5.48732 6.75902 6.53705 6.32825 5.77158 11 12 13 14 15 9.98259 9.75206 9.53020 9.11090 8.72173 8.36009 7.71008 7.41766 7.14457 6.88923 6.65022 6.01877 10.78685 10.51421 10.25262 9.76048 9.30641 8.88687 8.13896 7.80519 7.49506 7.20652 6.93770 6.23371 11.57534 11.25776 10.95400 10.38507 9.86325 9.38384 8.53608 8.16073 7.81369 7.49236 7.19437 6.42062 12.34837 11.98319 11.63496 10.98565 10.39357 9.85268 8.90378 8.48690 8.10336 7.74987 7.42355 6.58315 13.10625 12.69091 12 29607 11.56312 10.89864 10.29498 9.24424 8.78615 9.36669 7.98187 7.62817 6.72448 13.84926 13.38138 12.93794 12.11839 11.37966 10.71225 9.55948 9.06069 8.60608 8.19087 7.81086 6.84737 14.57771 14.05500 13.56110 12.65230 11.83777 11.10590 9.85137 9.31256 8.82371 8.37916 7.97399 6.95424 15.29187 14.71220 14.16612 13.16567 12.27407 11.47726 10.12164 9.54363 9.02155 8.54879 8.11963 7.04716 15.99203 15.35336 14.75351 13.65930 12.68959 11.82760 10.37189 9.75563 9.20141 8.70162 8.24967 7.12797 16.67846 15.97899 15.32380 14.13394 13.08532 12.15812 10.60360 9.95012 9.36492 8.83929 8.36578 7.19823 16 17 18 19 20 21 22 23 24 25 17.35143 16.58916 15.87747 14.59033 13.46221 12.46992 10.81815 10.12855 9.51356 8.96333 8.46944 7.25933 18.01121 17.18455 16.41502 15.02916 13.82115 12.76408 11.01680 10.29224 9.64869 9.07507 8.56200 7.31246 18.65805 17.76541 16.93692 15.45112 14.16300 13.04158 11.20074 10.44243 9.77154 9.17574 8.64465 7.35866 19.29220 18.33211 17.44361 15.85684 14.48857 13.30338 11.37106 10.58021 9.88322 9.26643 8.71843 7.39884 19.91393 18.88499 17.93554 16.24696 14.79864 13.55036 11.52876 10.70661 9.98474 9.34814 8.78432 7.43377 20.52346 19.42438 18.41315 16.62208 15.09394 13.78336 11.67478 10.82258 10.07704 9.42174 8.84314 7.46415 21.12104 19.95061 18.87684 16.98277 15.37519 14.00317 11.80998 10.92897 10.16095 9.48806 8.89566 7.49056 21.70690 20.46401 19.32703 17.32959 15.64303 14.21053 11.93518 11.02658 10.23722 9.54780 8.94255 7.51353 22.28127 20.96489 19.76411 17.66306 15.89813 14.40616 12.05108 11.11613 10.30657 9.60162 8.98442 7.53351 22.84438 21.45355 20.18845 17.98371 16.14107 14.59072 12.15841 11.19828 10.36961 9.65011 9.02181 7.55088 26 27 28 29 30 31 32 33 34 35 23.39646 21.93029 20.60044 18.29203 16.37245 14.76483 12.25778 11.27365 10.42691 9.69379 9.05518 7.56598 23.93770 22.39541 21.00043 18.58849 16.59281 14.92909 12.34980 11.34280 10.47901 9.73315 9.08499 7.57911 24.46833 22.84918 21.38877 18.87355 16.80268 15.08404 12.43500 11.40624 10.52638 9.76860 9.11159 7.59053 24.98856 23.29188 21.76579 19.14765 17.00255 15.23023 12.51389 11.46444 10.56943 9.80054 9.13535 7.60046 25.49859 23.72379 22.13184 19.41120 17.19290 15.36814 12.58693 11.51784 10.60858 9.82932 9.15656 7.60910 36 37 38 39 40 25.99862 24.14516 22.48722 19.66461 17.37419 15.49825 12.65457 11.56682 10.64416 9.85524 9.17550 7.61661 26.48884 24.55625 22.83225 19.90828 17.54685 15.62099 12.71719 11.61176 10.67651 9.87859 9.19241 7.62314 26.96945 24.95732 23.16724 20.14258 17.71129 15.73678 12.77518 11.65299 10.70592 9.89963 9.20751 7.62882 27.44064 25.34860 23.49246 20.36786 17.86789 15.84602 12.82887 11.69082 10.73265 9.91859 9.22099 7.63375 27.90259 25.73034 23.80822 20.58448 18.01704 15.94907 12.87858 11.72552 10.75697 9.93567 9.23303 7.63805 Table 1.4 PRESENT VALUE OF AN ORDINARY ANNUITY OF 1 1 PVF-04- (1+i) 1 242% 3% 5% 6% in) periods 1 2 3 4 5 WN 2% 98039 1.94156 2.88388 3.80773 4.71346 .97561 1.92742 2.85602 3.76197 4.64583 .97087 1.91347 2.82861 3.71710 4.57971 96154 1.88609 2.77509 3.62990 4.45182 .95238 1.85941 2.72325 3.54595 4.32948 94340 1.83339 2.67301 3.46511 4.21236 8% 9% 10% 11% 12% 15% 92593 91743 .90909 90090 .89286 .86957 1.78326 1.75911 1.73554 1.71252 1.69005 1.62571 2.57710 2.53130 2.48685 2.44371 2.40183 2.28323 3.31213 3.23972 3.16986 3.10245 3.03735 2.85498 3.99271 3.88965 3.79079 3.69590 3.60478 3.35216 6 7 8 9 10 5.60143 6.47199 7.32548 8.16224 8.98259 5.50813 6.34939 7.17014 7.97087 8.75206 5.41719 5.24214 5.07569 6.23028 6.00205 5.78637 7.01969 6.73274 6.46321 7.78611 7.43533 7.10782 8.53020 8.11090 7.72173 4.91732 5.58238 6.20979 6.80169 7.36009 4.62288 4.48592 4.35526 4.23054 4.11141 3.78448 5.20637 5,03295 4.86842 4.71220 4,56376 4.16042 5.74664 5.53482 5.33493 5.14612 4.96764 4.48732 6.24689 5.99525 5.75902 5.53705 5.32825 4.77158 6.7100B 6.41766 6.14457 5.88923 5.65022 5,01877 11 12 13 14 15 9.78685 9.51421 9.25262 8.76048 8.30641 7.88687 10.57534 10.25776 9.95400 9.38507 8.86325 8.38384 11.34837 10.98319 10.63496 9.98565 9.39357 8.85268 12.10625 11.69091 11.29607 10.56312 9.89864 9.29498 12.84926 12.38138 11.93794 11.11839 10.37966 9.71225 7.13896 6.80519 6.49506 6.20652 5.93770 5.23371 7.53608 7.16073 6.81369 6.49236 6.19437 5.42062 7.90378 7.48690 7.10336 6.74987 6.42355 5.58315 8.24424 7.78615 7.36669 6.98187 6.62817 5.72448 8.55948 8.06069 7.60608 7.19087 6.81086 5.84737 16 17 18 19 20 13.57771 13.05500 12.56110 11.65230 10.83777 10.10590 14.29187 13.71220 13.16612 12.16567 11.27407 10.47726 14.99203 14.35336 13.75351 12.65930 11.68959 10.82760 15.67846 14.97889 14.32380 13.13394 12.08532 11.15812 16.35143 15.58916 14.87747 13.59033 12.46221 11.46992 8.85137 8.31256 7.82371 7.37916 6.97399 5.95424 9.12164 8.54363 8.02155 7.54879 7.11963 6.04716 9.37189 8.75563 8.20141 7.70162 7.24967 6.12797 9.60360 8.95012 8.36492 783929 7.36578 6.19823 9.81815 9.12855 8.51356 7.96333 7.46944 6.25933 21 22 23 24 25 17.01121 16.18455 15.41502 14.02916 12.82115 11.76408 10.01680 9.29224 8.64869 8.07507 7.56200 6.31246 17.65805 16.76541 15.93692 14.45112 13.16800 12.04158 10.20074 9.44243 8.77154 8.17574 7.64465 6.35866 18.29220 17.33211 16.44361 14.85684 13.48857 12.30338 10.37106 9.58021 8.88322 8.26643 7.71843 6.39884 18.91393 17.88499 16.93554 15.24696 13.79864 12.55036 10.52876 9.70661 8.98474 8.34814 7.78432 6.43377 19.52346 18.42438 17.41315 15.62208 14.09394 12.78336 10.67478 9.82258 9.07704 8.42174 7.84314 6.46415 upBB EngDa 26 27 28 20.12104 18.95061 17.87684 15.98277 14.37519 13.00317 10.80998 9.92897 9.16095 8.48806 7.89566 6.49056 20.70690 19.46401 18.32703 16.32959 14.64303 13.21053 10.93516 10.02658 9.23722 8.45780 7.94255 6.51353 21.28127 19.96489 18.76411 16.66306 14.89813 13.40616 11.05108 10.11613 9.30657 8.60162 7.98442 6.53351 21.84438 20.45355 19.18845 16.98371 15.14107 13.59072 11.15841 10.19828 9.36961 8.65011 8.02181 6.55088 22.39646 20.93029 19.60044 17.29203 15.37245 13.76483 11.25778 10.27365 9,42691 8.69379 8.05518 6.56598 30 31 32 33 34 35 22.93770 21.39541 20.00043 17.58849 15.59281 13.92909 11.34980 10.34280 9.47901 8.73315 8.08499 6.57911 23.46833 21.84918 20.38877 17.87355 15.80268 14.08404 11.43500 10.40624 9.52638 8.76860 8.11159 6.59053 23.98856 22.29188 20.76579 18.14765 16.00255 14.23023 11.51389 10.46444 9.56943 8.80054 8.13535 6.60046 24.49859 22.72379 21.13184 18.41120 16.19290 14.36814 11.58693 10.51784 9.60858 8.82932 8.15656 6.60910 24.99862 23.14516 21.48722 18.66461 16.37419 14.49825 11.65457 10.56682 9.64416 8.85524 8.17550 6.61661 36 37 38 39 40 25,48884 23.55625 21.83225 18.90828 16.54685 14.62099 11.71719 10.61176 9.67651 8.87859 8.19241 6.62314 25.96945 23.95732 22.16724 19.14258 16.71129 14.73678 11.77518 10.65299 9.70592 8.89963 8.20751 6.62882 26.44064 24.34860 22.49246 19.36786 16.86789 14.84602 11.82887 10.69082 9.73265 8.91859 8.22099 6.63375 26.90259 24.73034 22.80822 19.58448 17.01704 14.94907 11.87858 10.72552 9.75697 8.93567 8.23303 6.63805 27.35548 25.10278 23.11477 19.79277 17.15909 15.04630 11.92461 10.75736 9.77905 8.95105 8.24378 6.64178 Using tables, a financial calculator, or Excel functions, calculate the PV of the lease payments and guaranteed residual value under the lease. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 5,275.) PV of the lease payments and guaranteed residual value $ List of Accounts Prepare the journal entries for the lessee and lessor at May 30, 2020, and at December 31, 2020, which is the lessee's and lessor's year end. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275.) Lessee: Date Account Titles and Explanation Debit Credit May 30, 2020 (To record inception of lease and first payment.) Dec. 31, 2020 Dec. 31, 2020 (To record depreciation expense.) Lessor: Date Account Titles and Explanation Debit Credit May 30, 2020 (To record inception of lease.) May 30, 2020 (Collection of lease payment.) Dec. 31, 2020 (To record interest.) Prepare the journal entries at May 30, 2021 for the lessee and lessor. Assume reversing entries are not used. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to 0 decimal places, e.g. 5,275.) Lessee: Date Account Titles and Explanation Debit Credit May 30, 2021 (To record lease payment.) Lessor: Date Account Titles and Explanation Debit Credit May 30, 2021 (To record interest.) May 30, 2021 (Collection of lease payment.) What amount would have been capitalized by the lessee upon inception of the lease if: (Round answers to O decimal places, e.g. 5,275.) 1. The residual value of $23,200 had been guaranteed by a third party, not the lessee? $ $ 2. The residual value of $23,200 had not been guaranteed at all? $ List of Accounts On the lessor's books, what amount would be recorded as the net investment at the inception of the lease, assuming: (Round answers to O decimal places, e.g. 5,275.) 1. Bridgeport Finance had incurred $1,200 of direct costs in processing the lease? $ . 2. The residual value of $23,200 had been guaranteed by a third party? $ 3. The residual value of $23,200 had not been guaranteed at all? $ $ Assume that the milk cooling equipment's useful life is 20 years. How large would the residual value have to be at the end of eight years in order for the lessee to qualify for the operating method assuming ASPE applies? Assume that the residual value would be guaranteed by a third party. (Hint: The lessee's annual payments will be appropriately reduced as the residual value increases.) (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 5,275.) The residual value would have had to be greater than $ List of Accounts