Delaney Company leases an automobile with a fair value of $10,000 from John Simon Motors, Inc., on the following terms: 1. Non-cancelable term of 50 months. 2. Rental of $200 per month (at the beginning of each month). 3. Delaney guarantees a residual value of $1,180. Delaney expects the probable residual value to be $1,180 at the end of the lease term. 4. Estimated economic life of the automobile is 60 months. 5. Delaney's incremental borrowing rate is 6% a year (0.5% a month). Simon's implicit rate is unknown. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Your answer is correct What is the nature of this lease to Delaney? The nature of this lease is a/an finance lease. e Textbook and Media List of Accounts What is the nature of this lease to Delaney? The nature of this lease is a/an finance lease eTextbook and Media List of Accounts * Your answer is incorrect. What is the present value of the lease payments to determine the lease liability? (Round answer to O decimal places, eg. 5,275.) Present value of the lease payments $ 9749 e Textbook and Media List of Accounts Present value of the lease payments $ 9749 eTextbook and Media List of Accounts Your answer is partially correct. Based on the original fact pattern, record the lease on Delaney's books at the date of commencement. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit 9749 right of use asset 9749 Lease Liability e Textbook and Media List of Accounts Accour right of use asset 9749 Lease Liability 9749 eTextbook and Media List of Accounts * Your answer is incorrect. Record the first month's lease payment (at commencement of the lease). (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to decimal places, eg. 5,275.) Account Titles and Explanation Debit Credit e Textbook and Media List of Accounts * Your answer is incorrect. Record the second month's lease payment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to decimal places, eg. 5,275.) Debit Credit Account Titles and Explanation eTextbook and Media List of Accounts * Your answer is incorrect. Record the first month's amortization on Delaney's books (assume straight-line). (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 2 decimal places, eg. 5,275.25.) Debit Credit Account Titles and Explanation e Textbook and Media List of Accounts * Your answer is incorrect. Suppose that instead of $1,180, Delaney expects the residual value to be only $500 (the guaranteed amount is still $1,180). How does the calculation of the present value of the lease payments change from part (b)? (Round answer to O decimal places, eg. 5,275.) PV of lease payments $ e Textbook and Media List of Accounts Save for Later Attempts: 1 of 10 used Submit
