Question

What are executory costs? Under what circumstances would the lessee have to subtract these costs from...

What are executory costs? Under what circumstances would the lessee have to subtract these costs from the annual lease payment when calculating the present value of the minimum lease payments? When would they not be subtracted?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer)

Executory costs are typically associated when owning a asset and property tax may be termed as best example for it.

When performing the calculation to determine a lease whether capital lease or operating lease then this executory costs are to be substracted from minimum lease payments if it is included in it. If these executory costs are not part of minimum lease payment and the lessee has paid it directly to the lessee than it is not needed to substracted from minimum lease payments.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On December 31, 2000, Reilly Co. leased a machine from Bass, Inc. for a five-year period....
On December 31, 2000, Reilly Co. leased a machine from Bass, Inc. for a five-year period. Equal annual payments under the noncancelable lease are $315,000 (including $15,000 annual executory costs) and are due on December 31 of each year. The first payment was made on December 31, 2000, and the second payment was made on December 31, 2001. The present value of minimum lease payments at the inception of the lease (prior to the first annual payment) was $1,256,000. The...
Please answer all a,b,c! Eubank Company, as lessee, enters into a capitalized lease agreement on January...
Please answer all a,b,c! Eubank Company, as lessee, enters into a capitalized lease agreement on January 1, 2018, for equipment. The following data are relevant to the lease agreement: The term of the non-cancelable lease is 4 years with no renewal option. Payments of $782,757 are made at the beginning of each year. The present value of the minimum lease payments equals $2,800,000. The fair value of the equipment on 1/1/18 is $2,800,000. The equipment has an economic life of...
Select from the option list provided whether each item is a criterion that, if satisfied, results...
Select from the option list provided whether each item is a criterion that, if satisfied, results in classification of a lease as a capital lease by the lessee. Each choice may be used once, more than once, or not at all. a) For a capital lease b) NOT for a capital lease Criterion 1. The lease term is 90% or more of the estimated economic life of the leased property. 2. The lease contains a bargain purchase option. 3. The...
1. The methods of accounting for a lease by a lessee are a. operating and sales-type...
1. The methods of accounting for a lease by a lessee are a. operating and sales-type lease methods. b. operating and finance lease methods. c. operating and direct financing lease methods. d. none of these answers are correct.     2.     In computing the present value of the lease payments, the lessee should a.   use its incremental borrowing rate in all cases. b.   use both its incremental borrowing rate and the implicit rate of the lessor, assuming that the implicit rate...
Lessee Company enters into a lease on January 1, 2021, that is accounted for as a...
Lessee Company enters into a lease on January 1, 2021, that is accounted for as a finance lease. The lease calls for quarterly payments of $20,000, beginning on January 1, 2021, and continuing for 5 years. The last payment is due on October 1, 2025. The lease has an implicit annual interest rate of 9%. The present value of an annuity due at 9% per period for 5 periods is 4.240; the present value of an annuity due at 2.25%...
Eubank Company, as lessee, enters into a lease agreement on July 1, 2014, for equipment. The...
Eubank Company, as lessee, enters into a lease agreement on July 1, 2014, for equipment. The following data are relevant to the lease agreement: 1. The term of the non-cancelable lease is 4 years, with no renewal option. Payments of $782,757 are due on July 1 of each year. 2. The fair value of the equipment on July 1, 2014 is $2,800,000. The equipment has an economic life of 6 years with no salvage value. 3. Eubank amortize the right...
Lessee leased a machine from Lessor under a 10-year, noncancelable lease. The transaction was properly classified...
Lessee leased a machine from Lessor under a 10-year, noncancelable lease. The transaction was properly classified as a finance lease, and a right-of-use asset and a lease liability of $100,000 were recorded. The $14,900 annual payments made at the end of each lease period were discounted at 8% implicit interest to derive the initial $100,000 amounts. Lessee should record the following interest expense at the end of Years 1 and 2: Please show solution Year 1 Year 2 A. $8,000...
Lessor leasing company agrees to lease equipment to Lessee corp. on Jan 1, 2019, both Lessor...
Lessor leasing company agrees to lease equipment to Lessee corp. on Jan 1, 2019, both Lessor and Lessee follows IFRS. The following information relates to the lease agreement: 1- the lease term is 7 years, no renewal, 2- Lessor acquired the equipment this day Jan 1, 2019 for $560,000 cash, the useful life 10 years 3- at the end of the term the equipment to be returned to the lessor with guaranteed residual value of $40,000 4- the lease agreement...
. Eubank Company, as the lessee, enters into a lease agreement on January 1, 2020, for...
. Eubank Company, as the lessee, enters into a lease agreement on January 1, 2020, for equipment. The following data are relevant to the lease agreement: 1.   The term of the noncancelable lease is 4 years. Payments of $978,446 are due on January 1 of each year. 2.   The fair value of the equipment on January 1, 2020 is $3,6000,000. The equipment has an economic life of 6 years with no salvage value. 3.   Eubank depreciates similar machinery it owns...
Multiple Choice Based on PSAK 48 / IAS 36-impairment of assets, and the accounting treatment using...
Multiple Choice Based on PSAK 48 / IAS 36-impairment of assets, and the accounting treatment using the cost model is as follows: When the carrying amount of an asset is greater than its recoverable amount, the carrying amount of the asset is reduced to its recoverable amount. When the carrying amount of an asset is less than its recoverable amount, there is no change in asset value. When the carrying amount of an asset is greater than its recoverable amount,...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT