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Ivanhoe Manufacturing Ltd . has signed a lease agreement with Oriole Leasing Inc. to lease some specialized manufacturing equipment. The terms of the lease are
Ivanhoe Manufacturing Ltd has signed a lease agreement with Oriole Leasing Inc. to lease some specialized manufacturing
equipment. The terms of the lease are as follows:
The lease is for years commencing January
Ivanhoe must pay Oriole $ on January of each year, beginning in
Equipment of this type normally has an economic life of years.
Oriale has concluded, based on its review of lvanhoe's financial statements, that there is no unusual credit risk in this
situation. Oriale will not incur any further costs with regard to this lease
Oriale purchases this equipment directly from the manufacturer at a cost of $ and normally sells the equipment for
$
Ivanhoe's borrowing rate is Oriole's implied interest rate is which is known to lvanhoe at the time of negotiating the
lease.
Ivanhoe uses the straightline method to depreciate similar equipment.
Both lvanhoe and Oriole have calendar fiscal years year end December and follow ASPE.
Click here to view the factor table PRESENT VALUE OF
Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE.
a
Your answer is correct.
From Ivanhoe Manufacturing's perspective, is this a capital or operating lease?
Ivanhoe will classify this as an capital lease
eTextbook and Media
List of Accounts
c
Your answer is partially correct.
Prepare alease amortization schedule for this lease. Round answers to decimal places, eg
List of Accounts
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