Question
The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Wildhorse Company, a lessee. Commencement date January 1, Annual lease payment
The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Wildhorse Company, a lessee.
| Commencement date | January 1, | ||
| Annual lease payment due at the beginning of each year, beginning with January 1, | $122,829 | ||
| Residual value of equipment at end of lease term, guaranteed by the lessee | $51,000 | ||
| Expected residual value of equipment at end of lease term | $46,000 | ||
| Lease term | 6 | years | |
| Economic life of leased equipment | 6 | years | |
| Fair value of asset at January 1, | $631,000 | ||
| Lessors implicit rate | 9 | % | |
| Lessees incremental borrowing rate | 9 | % |
The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment.
| WILDHORSE COMPANY (Lessee) Lease Amortization Schedule | ||||||||
|---|---|---|---|---|---|---|---|---|
| Date | Annual Lease Payment Plus GRV | Interest on Liability | Reduction of Lease Liability | Lease Liability | ||||
| 1/1/20 | $enter a dollar amount rounded to 0 decimal places | $enter a dollar amount rounded to 0 decimal places | $enter a dollar amount rounded to 0 decimal places | $enter a dollar amount rounded to 0 decimal places | ||||
| 1/1/20 | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | ||||
| 1/1/21 | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | ||||
| 1/1/22 | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | ||||
| 1/1/23 | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | ||||
| 1/1/24 | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | ||||
| 1/1/25 | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | ||||
| 12/31/26 | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | ||||
| $enter a total amount | $enter a total amount | $enter a total amount | ||||||
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Sound Investing, Chapter 6 - Valuation Of Assets And Liabilities
Authors: Kate Mooney
1st Edition
0071719288, 9780071719285
