Chapter 15 Day 1-3

# Chapter 15 Day 1-3 - BriefExercise154 The lease is a...

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Brief Exercise 15-4 The lease is a capital lease to Athens because the present value of the minimum lease payments (\$20.4 million) is greater than 90% of the fair value of the asset (90% x \$22.4 million = \$20.16 million). None of the other three classification criteria is met.

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Brief Exercise 15-8 The lease payable in the balance sheet will be \$113,731 : Initial balance, January 1  (calculated below) ............. \$140,000 Reduction for first payment, January 1 ....................   (26     ,269) December 31, net liability ........................................ \$113,731 \$26,269 x 5.32948  = \$140,000 (rounded) present value of an annuity due of \$1: n=6, i=5% The liability for interest on the lease payable in the balance sheet will be  \$ 5,687 : Interest expense  (5% x [\$140,000 – 26,269]) ................ 5,687 Interest payable .....................................................   5,687
Exercise 15-1 (a) Nath-Langstrom Services, Inc. (Lessee) June 30, 2016 Rent expense ................................... 10,000 Cash   ............................................ 10,000 December 31, 2016 Rent expense ................................... 10,000 Cash   ............................................ 10,000

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Exercise 15-3 Present Value of Minimum Lease Payments: (\$15,000 x 7.47199 * ) = \$112,080 lease present payments value present value of an annuity due of \$1: n=8, i=2%
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• Fall '09
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