Question
Problem 15-7 Sales-type lease; lessor; financial statement effects [LO15-6] NutraLabs, Inc., leased a protein analyzer to Werner Chemical, Inc., on September 30, 2016. NutraLabs manufactured
Problem 15-7 Sales-type lease; lessor; financial statement effects [LO15-6]
NutraLabs, Inc., leased a protein analyzer to Werner Chemical, Inc., on September 30, 2016. NutraLabs manufactured the machine at a cost of $4.9 million. The five-year lease agreement calls for Werner to make quarterly lease payments of $378,497, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2016. NutraLabs implicit interest rate is 8%. (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.) |
Required: |
1. | Determine the price at which NutraLabs is selling the equipment (present value of the lease payments) at September 30, 2016. |
2. | What amounts related to the lease would NutraLabs report in its balance sheet at December 31, 2016 (ignore taxes)? |
3. | What amounts related to the lease would NutraLabs report in its income statement for the year ended December 31, 2016 (ignore taxes)? |
4. | What amounts related to the lease would NutraLabs report in its statement of cash flows for the year ended December 31, 2016 (ignore taxes)? |
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