The lease agreement specifies annual payments of $25,000 beginning January 1, 2018, the beginning of the lease, and at each December 31 thereafter through 2025. The equipment was acquired recently by Crescent at a cost of $180,000 (its fair value) and was expected to have a useful life of 12 years with no salvage value at the end of its life. (Because the lease term is only 9 years, the asset does have an expected residual value at the end of the lease term of $50,995.). Both At January 1, 201 8, Caf Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement. (a) the present value of the lease payments and (b) the present value of the residual value (i.e, the residual asset) are included in the lease receivable because the two amounts combine to allow the lessor to recover its net investment. ts rescent seeks a 10% retur of $1, PV of $1, FVA of $1, PVA of S1, FVAD of S1 and Required: negative numbers.) n on its lease investments. By this arrangement, the lease is deemed to be a finance lease. (FV eBook PVAD of $1 (Use appropriate factor(s) from the tables provided.) Print e the 1. What will be the References effect of the lease on Crescent's earnings for the first year? ignore taxes) (Enter decreases with 2. What will be the balances in the balance sheet accounts related to the lease at the end of the first year for Crescent? lignore taxes) 1 Effect on earnings 2. Lease receivable balance (end of year) The lease agreement specifies annual payments of $25,000 beginning January 1, 2018, the beginning of the lease, and at each December 31 thereafter through 2025. The equipment was acquired recently by Crescent at a cost of $180,000 (its fair value) and was expected to have a useful life of 12 years with no salvage value at the end of its life. (Because the lease term is only 9 years, the asset does have an expected residual value at the end of the lease term of $50,995.). Both At January 1, 201 8, Caf Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement. (a) the present value of the lease payments and (b) the present value of the residual value (i.e, the residual asset) are included in the lease receivable because the two amounts combine to allow the lessor to recover its net investment. ts rescent seeks a 10% retur of $1, PV of $1, FVA of $1, PVA of S1, FVAD of S1 and Required: negative numbers.) n on its lease investments. By this arrangement, the lease is deemed to be a finance lease. (FV eBook PVAD of $1 (Use appropriate factor(s) from the tables provided.) Print e the 1. What will be the References effect of the lease on Crescent's earnings for the first year? ignore taxes) (Enter decreases with 2. What will be the balances in the balance sheet accounts related to the lease at the end of the first year for Crescent? lignore taxes) 1 Effect on earnings 2. Lease receivable balance (end of year)
