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15-35 answer - 15—35 The lease is a capital lease for the...

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Unformatted text preview: 15—35. The lease is a capital lease for the lessee because the lessee knows the implicit interest rate of 12%, and this is the rate that makes the present value of the minimum lease payments equal to the cash price. Thus, the 90% of fair value criterion is satisfied. 2011 May 1 Leased Automobile. 13,251 Obligations under Capital Leases To record lease. 1 Obligations under Capital Leases................ 4,000 Cash" To record first lease payment 2012 Apr. 30 Obligations under Capital Leases................ 2,090 Interest Expense 1,110* Cash" To record second lease payment “$13,251 —$-t,000= $9,251 $9,251 at 0.12 = $1,110 2012 Apr. 30 Amortization Expense on Leased Automobile... 3,01?“ Accumulated Amortlzatlon on Leased Automobile... “$13, 251— $-t,200= $9, 051 $9, 051l3= $3, 01? Leased automobile... $13,251 Accumulated amortization on leased automobile... 9,051 Net balance... fl Obligations under capital leases [guaranteed residual value)" 5 3,500 Cash... 3,000 Accumulated AmortIzatIon ”on Leased Automoblle ....... 9,051 Loss on Sale of Leased Automobile................................ 400 Leased Automobile. .... To record sale of leased automobile for" $400 less than expected residual value. Obligations under Capital Leases 3,500 Cash... To record pairment to lessor or guaranteed residual value. 13,251 4,000 4,000 3,011 13,251 3,500 ...
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