Question
On January 1, 2021, National Insulation Corporation (NIC) leased equipment from United Leasing under a finance...
On January 1, 2021, National Insulation Corporation (NIC) leased
equipment from United Leasing under a finance lease. Lease payments
are made annually. Title does not transfer to the lessee and there
is no purchase option or guarantee of a residual value by NIC.
Portions of the United Leasing’s lease amortization schedule appear
below: (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.)
| Jan. 1 | Payments | Effective Interest | Decrease in Balance | Outstanding Balance | ||||
| 2021 | 136,642 | |||||||
| 2021 | 15,000 | 15,000 | 121,642 | |||||
| 2022 | 15,000 | 13,381 | 1,619 | 120,023 | ||||
| 2023 | 15,000 | 13,203 | 1,797 | 118,226 | ||||
| 2024 | 15,000 | 13,005 | 1,995 | 116,231 | ||||
| 2025 | 15,000 | 12,785 | 2,215 | 114,016 | ||||
| 2026 | 15,000 | 12,542 | 2,458 | 111,558 | ||||
| — | — | — | — | — | ||||
| — | — | — | — | — | ||||
| — | — | — | — | — | ||||
| 2038 | 15,000 | 6,400 | 8,600 | 49,581 | ||||
| 2039 | 15,000 | 5,454 | 9,546 | 40,035 | ||||
| 2040 | 15,000 | 4,404 | 10,596 | 29,439 | ||||
| 2041 | 32,677 | 3,238 | 29,439 | 0 | ||||
Required:
1. What is the lease term in years?
2. What is the asset’s residual value expected at
the end of the lease term? (Round your answers to nearest
whole dollar.)
3. What is the effective annual interest rate?
(Round your percentage answer to 1 decimal
place.)
4. What is the total amount of lease payments for
United? (Round your answers to nearest whole
dollar.)
5. What is the total amount of lease payments for
NIC? (Round your answers to nearest whole
dollar.)
6. What is United’s net investment at the
beginning of the lease (after the first payment)? (Round
your answers to nearest whole dollar.)
7. What is United’s total effective interest
revenue recorded over the term of the lease? (Round your
answers to nearest whole dollar.)
8. What amount would NIC record as a right-of-use
asset at the beginning of the lease? (Round your answers to
nearest whole dollar.)
Homework Answers
Answer #1
Not the answer you're looking for?
Similar Questions
On January 1, 2021, National Insulation Corporation (NIC) leased equipment from United Leasing under a finance...
On January 1, 2021, National Insulation Corporation (NIC) leased
equipment from United Leasing under a finance lease. Lease payments
are made annually. Title does not transfer to the lessee and there
is no purchase option or guarantee of a residual value by NIC.
Portions of the United Leasing’s lease amortization schedule appear
below: (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.)
Jan....
On January 1, 2021, National Insulation Corporation (NIC) leased equipment from United Leasing under a finance...
On January 1, 2021, National Insulation Corporation (NIC) leased
equipment from United Leasing under a finance lease. Lease payments
are made annually. Title does not transfer to the lessee and there
is no purchase option or guarantee of a residual value by NIC.
Portions of the United Leasing’s lease amortization schedule appear
below: (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.)
Jan....
On January 1, 2021, Majestic Mantles leased a lathe from Equipment Leasing under a finance lease....
On January 1, 2021, Majestic Mantles leased a lathe from
Equipment Leasing under a finance lease. Lease payments are made
annually. Title does not transfer to the lessee and there is no
purchase option or guarantee of a residual value by Majestic.
Portions of the Equipment Leasing’s lease amortization schedule
appear below:
Jan. 1
Payments
Effective Interest
Decrease in Balance
Outstanding Balance
248,170
2021
26,500
26,500
221,670
2022
26,500
22,167
4,333
217,337
2023
26,500
21,734
4,766
212,571
2024
26,500
21,257...
On January 1, 2018, Majestic Mantles leased a lathe from Equipment Leasing under a finance lease....
On January 1, 2018, Majestic Mantles leased a lathe from
Equipment Leasing under a finance lease. Lease payments are made
annually. Title does not transfer to the lessee and there is no
purchase option or guarantee of a residual value by Majestic.
Portions of the Equipment Leasing’s lease amortization schedule
appear below:
Jan. 1
Payments
Effective Interest
Decrease in Balance
Outstanding Balance
246,579
2018
22,500
0
22,500
224,079
2018
22,500
16,806
5,694
218,385
2019
22,500
16,379
6,121
212,264
2020
22,500...
On January 1, 2018, Majestic Mantles leased a lathe from Equipment Leasing under a finance lease....
On January 1, 2018, Majestic Mantles leased a lathe from
Equipment Leasing under a finance lease. Lease payments are made
annually. Title does not transfer to the lessee and there is no
purchase option or guarantee of a residual value by Majestic.
Portions of the Equipment Leasing’s lease amortization schedule
appear below:
Jan. 1
Payments
Effective Interest
Decrease in Balance
Outstanding Balance
210,711
2018
22,500
22,500
188,211
2018
22,500
18,821
3,679
184,532
2019
22,500
18,453
4,047
180,485
2020
22,500
18,049...
At January 1, 2021, Café Med leased restaurant equipment from Crescent Corporation under a nine-year lease...
At January 1, 2021, Café Med leased restaurant equipment from
Crescent Corporation under a nine-year lease agreement. The lease
agreement specifies annual payments of $28,000 beginning January 1,
2021, the beginning of the lease, and at each December 31
thereafter through 2028. The equipment was acquired recently by
Crescent at a cost of $198,000 (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...
At January 1, 2021, Café Med leased restaurant equipment from Crescent Corporation under a nine-year lease...
At January 1, 2021, Café Med leased restaurant equipment from
Crescent Corporation under a nine-year lease agreement. The lease
agreement specifies annual payments of $28,000 beginning January 1,
2021, the beginning of the lease, and at each December 31
thereafter through 2028. The equipment was acquired recently by
Crescent at a cost of $198,000 (its fair value) and was expected to
have a useful life of 13 years with no salvage value at the end of
its life. (Because the...
On January 1, 2021, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a four-year period...
On January 1, 2021, Maywood Hydraulics leased drilling equipment
from Aqua Leasing for a four-year period ending December 31, 2024,
at which time possession of the leased asset will revert back to
Aqua. The equipment cost Aqua $424,537 and has an expected economic
life of five years. Aqua expects the residual value at December 31,
2024, to be $61,000. Negotiations led to Maywood guaranteeing a
$86,500 residual value.
Equal payments under the lease are $122,000 and are due on
December...
On June 30, 2021, Georgia-Atlantic, Inc. leased warehouse equipment from IC Leasing Corporation. The lease agreement...
On June 30, 2021, Georgia-Atlantic, Inc. leased warehouse
equipment from IC Leasing Corporation. The lease agreement calls
for Georgia-Atlantic to make semiannual lease payments of $604,152
over a four-year lease term (also the asset’s useful life), payable
each June 30 and December 31, with the first payment at June 30,
2021. Georgia-Atlantic's incremental borrowing rate is 10%, the
same rate IC used to calculate lease payment amounts. IC purchased
the equipment from Builders, Inc. at a cost of $4.1 million....
At January 1, 2021, Café Med leased restaurant equipment from Crescent Corporation under a nine-year lease...
At January 1, 2021, Café Med leased restaurant equipment from
Crescent Corporation under a nine-year lease agreement. The lease
agreement specifies annual payments of $21,000 beginning January 1,
2021, the beginning of the lease, and at each December 31
thereafter through 2028. 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 13 years with no salvage value at the end of
its life. (Because the...
ADVERTISEMENT
Need Online Homework Help?
Get Answers For Free
Most questions answered within 1 hours.
ADVERTISEMENT
Active Questions
asked 7 minutes ago
asked 9 minutes ago
asked 17 minutes ago
asked 30 minutes ago
asked 42 minutes ago
asked 45 minutes ago
asked 1 hour ago
asked 1 hour ago
asked 2 hours ago
asked 2 hours ago
asked 3 hours ago
asked 4 hours ago