Question
Teal Mountain Corporation leases a building to Sandhill, Inc. on January 1, 2020. The following facts pertain to the lease agreement. 1. The lease term
Teal Mountain Corporation leases a building to Sandhill, Inc. on January 1, 2020. The following facts pertain to the lease agreement.
1. | The lease term is 10 years with equal annual rental payments of $ 3,824 at the end of each year. | |
2. | Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. | |
3. | The building has a fair value of $ 34,900, a book value to Teal Mountain of $ 22,800, and a useful life of 15 years. | |
4. | At the end of the lease term, Teal Mountain and Sandhill expect the residual value of the building to be $ 12,100, and this amount is guaranteed by Money, Inc., a third party. | |
5. | Teal Mountain wants to earn a 6% return on the lease, and collectibility of the payments is probable. |
Assume the present value of lease payments and third-party guarantee is $ 34,900 and the rate of return to amortize the net lease receivable to zero is 14.39%. Prepare the amortization schedules Teal Mountain would use to amortize the net lease receivable to zero. (Round answers to 0 decimal places, e.g. 5,275.)
Assume the present value of lease payments and third-party guarantee is $ 34,900 and the rate of return to amortize the net lease receivable to zero is 14.39%. Prepare the amortization schedules Teal Mountain would use to amortize the net lease receivable to zero. (Round answers to 0 decimal places, e.g. 5,275.)
TEAL MOUNTAIN CORPORATION (Lessor) Lease Amortization Schedule Sales-Type Lease | ||||||||
Date | Annual Lease Payment | Interest on Lease Receivable | Recovery of Lease Receivable | Lease Receivable | ||||
1/1/20 | $ | $ | $ | $ | ||||
12/31/20 | ||||||||
12/31/21 | ||||||||
12/31/22 | ||||||||
12/31/23 | ||||||||
12/31/24 | ||||||||
12/31/25 | ||||||||
12/31/26 | ||||||||
12/31/27 | ||||||||
12/31/28 | ||||||||
12/31/29 | * | |||||||
12/31/30 | ||||||||
$ | $ | $ |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started