For a sales-type lease, A. the sales price includes the present value of the unguaranteed residual...
For a sales-type lease,
A. the sales price includes the present value of the unguaranteed residual value.
B. the present value of the guaranteed residual value is deducted to determine the cost of goods sold.
C. the gross profit will be the same whether the residual value is guaranteed or unguaranteed.
D. none of these answers are correct.
Homework Answers
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For a sales-type lease,
A. the sales price includes the present value of the
unguaranteed residual...
When a lessee is accounting for a capital (finance) lease a) a guaranteed residual value is...
When a lessee is accounting for a capital (finance) lease a) a guaranteed residual value is excluded from the “minimum lease payments.” b) an unguaranteed residual value is excluded from the “minimum lease payments.” c) a guaranteed residual value is basically an additional lease payment due at the end of the lease. d) the present value of any guaranteed residual is deducted from the leased asset cost in determining the depreciable amount. In calculating depreciation of a leased asset, the...
Choose the correct statement about an unguaranteed residual in a lease. a. the lease contract specifies...
Choose the correct statement about an unguaranteed residual in a lease. a. the lease contract specifies the amount of the unguaranteed residual b. the unguaranteed residual is not included in the lessor’s minimum lease payments but is included in the lease receivable if the lease is capitalized c. the unguaranteed residual is not a factor to be included in the lessor’s equation for purposes of computing the annual lease payment (LP) d. the unguaranteed residual is one of the factors...
Unguaranteed residual value; Executory costs; sales-type lease
Rhone-Metro Industries manufactures equipment that is sold or leased. On December 31,2009, Rhone-Metro leased equipment to Western Soya Co. for a four-year periodending Decemeber 31, 2013, at which time possession of the leased asset will revert back to Rhone-Metro. The equipment cost $300,000 to manufacture and has anexpected useful life of six years. Its normal sales price is $365,760. The expected residual value of $25,000 at December 31,2013, is not guaranteed. Equalpayments under the lease are $104,000 (including $4,000 executory...
Exercise 15-26 Lease concepts; finance/salestype leases; guaranteed and unguaranteed residual value [LO15-2, 15-6] Each of the...
Exercise 15-26 Lease concepts; finance/salestype leases; guaranteed and unguaranteed residual value [LO15-2, 15-6] Each of the four independent situations below describes a sales-type lease in which annual lease payments of $170.000 are payable at the beginning of each year. Each is a finance lease for the lessee. (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.) Situation 18% Lease term (years) Lessor's and...
Which of the following would be included in the Lease Receivable account? I. Guaranteed residual value. II. Unguaranteed...
Which of the following would be included in the Lease Receivable account? I. Guaranteed residual value. II. Unguaranteed residual value. III. Executory costs IV. Rental payments. Select one: a. I, II and IV b. II, III, and IV c. I and II only d. I and III only
Each of the four independent situations below describes a sales-type lease in which annual lease payments...
Each of the four independent situations below describes a sales-type lease in which annual lease payments of $17,000 are payable at the beginning of each year Each is a finance lease for the lessee. (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.) 0 Lease term (years) Asset's useful life (years) Lessor's implicit rate (known by lessee) Residual values Guaranteed by lessee Unguaranteed...
E21.13 (LO 2,4) (Lessee-Lessor Entries, Sales-Type Lease; Guaranteed Residual Value) Phelps Company leases a building to...
E21.13 (LO 2,4) (Lessee-Lessor Entries, Sales-Type Lease; Guaranteed Residual Value) Phelps Company leases a building to Walsh, Inc. on January 1, 2020. The following facts pertain to the lease agreement. 1. The lease term is 5 years, with equal annual rental payments of $4,703 at the beginning 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...
Under a sales-type lease without an operating profit, how is the lessor’s cost (i.e., the initial...
Under a sales-type lease without an operating profit, how is the lessor’s cost (i.e., the initial Lease Receivable account) computed: When there is no bargain purchase option or residual value? When there is a bargain purchase option? When there is no bargain purchase option but there is a guaranteed residual value? When there is no bargain purchase option but there is an unguaranteed residual value? Which discount rate does the lessor use in computing the lessor’s cost (lease receivable)—the lessor’s...
Each of the four independent situations below describes a sales-type lease in which annual lease payments...
Each of the four independent situations below describes a
sales-type lease in which annual lease payments of $17,000 are
payable at the beginning of each year. Each is a finance lease for
the lessee. (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.) Situation 1 2 3 4 Lease term (years) 2 2 2 2 Asset’s
useful life (years) 2 3 3 5...
Each of the four independent situations below describes a sales-type lease in which annual lease payments...
Each of the four independent situations below describes a sales-type lease in which annual lease payments of $16,000 are payable at the beginning of each year. Each is a finance lease for the lessee. (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.) Situation Uw 5 118 11% Lease term (years) Asset's useful life (years) Lessor's implicit rate (known by lessee) Residual value:...
Exercise 15-26 Lease concepts; finance/salestype leases; guaranteed and unguaranteed residual value [LO15-2, 15-6] Each of the four independent situations below describes a sales-type lease in which annual lease payments of $170.000 are payable at the beginning of each year. Each is a finance lease for the lessee. (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.) Situation 18% Lease term (years) Lessor's and...
Each of the four independent situations below describes a sales-type lease in which annual lease payments of $17,000 are payable at the beginning of each year Each is a finance lease for the lessee. (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.) 0 Lease term (years) Asset's useful life (years) Lessor's implicit rate (known by lessee) Residual values Guaranteed by lessee Unguaranteed...
E21.13 (LO 2,4) (Lessee-Lessor Entries, Sales-Type Lease; Guaranteed Residual Value) Phelps Company leases a building to Walsh, Inc. on January 1, 2020. The following facts pertain to the lease agreement. 1. The lease term is 5 years, with equal annual rental payments of $4,703 at the beginning 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...
Each of the four independent situations below describes a
sales-type lease in which annual lease payments of $17,000 are
payable at the beginning of each year. Each is a finance lease for
the lessee. (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.) Situation 1 2 3 4 Lease term (years) 2 2 2 2 Asset’s
useful life (years) 2 3 3 5...
Each of the four independent situations below describes a sales-type lease in which annual lease payments of $16,000 are payable at the beginning of each year. Each is a finance lease for the lessee. (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.) Situation Uw 5 118 11% Lease term (years) Asset's useful life (years) Lessor's implicit rate (known by lessee) Residual value:...
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