Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On January 1, 2021, National Insulation Corporation (NIC) leased equipment from United Leasing under a finance lease. Lease payments are made annually. Title does not

On January 1, 2021, National Insulation Corporation (NIC) leased equipment from United Leasing under a finance lease. Lease payments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by NIC. Portions of the United Leasings lease amortization schedule appear below: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Jan. 1 Payments Effective Interest Decrease in Balance Outstanding Balance
2021 243,635
2021 24,000 24,000 219,635
2022 24,000 19,767 4,233 215,402
2023 24,000 19,386 4,614 210,788
2024 24,000 18,971 5,029 205,759
2025 24,000 18,518 5,482 200,277
2026 24,000 18,025 5,975 194,302
2038 24,000 7,194 16,806 63,129
2039 24,000 5,682 18,318 44,811
2040 24,000 4,033 19,967 24,844
2041 27,080 2,236 24,844 0

Required: 1. What is the lease term in years? 2. What is the assets residual value expected at the end of the lease term? (Round your answers to nearest whole dollar.) 3. What is the effective annual interest rate? (Round your percentage answer to 1 decimal place.) 4. What is the total amount of lease payments for United? (Round your answers to nearest whole dollar.) 5. What is the total amount of lease payments for NIC? (Round your answers to nearest whole dollar.) 6. What is Uniteds net investment at the beginning of the lease (after the first payment)? (Round your answers to nearest whole dollar.) 7. What is Uniteds total effective interest revenue recorded over the term of the lease? (Round your answers to nearest whole dollar.) 8. What amount would NIC record as a right-of-use asset at the beginning of the lease? (Round your answers to nearest whole dollar.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting Tools For Business Decision-Making

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso

2nd Canadian Edition

0470833378, 978-0470833377

More Books

Students also viewed these Accounting questions

Question

Define and describe the sections in a job description.

Answered: 1 week ago

Question

Discuss the relationship between job analysis and HRM processes.

Answered: 1 week ago