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Hayes Corp. is a manufacturer of truck trailers. On January 1, 2019, Hayes Corp. leases ten trailers to Lester Company under a six-year noncancelable lease
Hayes Corp. is a manufacturer of truck trailers. On January 1, 2019, Hayes Corp. leases ten trailers to Lester Company under a six-year noncancelable lease agreement. The following information about the lease and the trailers is provided: 2. Equal annual payments that are due on January 1 each year provide Hayes Corp. with an 8% return on net investment (present value factor for 6 periods at 8% is 4.99271). Titles to the trailers pass to Lester at the end of the lease. . The fair value of each trailer is $60,000. The cost of each trailer to Hayes Corp. is $54.000 Each trailer has an expected useful life of nine years. Collectability of the lease payments is probable. nstructions What are the 5 criteria we need to look at to determine if this was a finance lease or operating lease? Which criteria does this lease meet? What are the annual lease payments? Show your work! Who is the lessor? The Lessee? Prepare a lease amortization table for both the lessor and lessee for three years lease. Prepare the journal entries for 2019 for both the lessee and lessor. (a) (b) (c) (d) (e)
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