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Problem 1 5 - 4 ( Algo ) Finance / sales - type lease; lessee and lessor [ L 0 1 5 - 1 ,
Problem Algo Financesalestype lease; lessee and lessor L
Rand Medical manufactures lithotripters. Lithotripsy uses shock waves instead of surgery to eliminate kidney stones. Physicians'
Leasing purchased a lithotripter from Rand for $ and leased it to MidSouth Urologists Group, Incorporated, on January
Note: Use tables, Excel, or a financial calculator. FV of $ PV of $ FVA of $ PVA of $ FVAD of $ and PVAD of $
Lease Description:
Quarterly lease payments $ beginning of each period
Lease term years quarters
No residual value; no purchase option
Economic life of lithotripter years
Implicit interest rate and lessee's incremental borrowing
rate
Fair value of asset $
Required:
How should this lease be classified by MidSouth Urologists Group and by Physicians' Leasing?
Prepare appropriate entries for both MidSouth Urologists Group and Physicians' Leasing from the beginning of the lease
through the second rental payment on April Adjusting entries are recorded at the end of each fiscal year December
Assume MidSouth Urologists Group leased the lithotripter directly from the manufacturer, Rand Medical, which produced the
machine at a cost of $ million. Prepare appropriate entries for Rand Medical from the beginning of the lease through the
second lease payment on April
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Lessee
Lessor
How should this lease be classified by MidSouth Urologists Group and by Physicians' Leasing?
MidSouth Urologists Group
Physicians' Leasing
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