Chapter 15 HW-Part II

No no no 4 yrs 75 of 6 yrs yes 365760b 90 of

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Unformatted text preview: 365,760 Plus: Present value of the lessee-guaranteed residual value ($25,000 x .68301*) Presentvalueofminimumleasepayments *presentvalueof$1:n=4,i=10% **presentvalueofanannuitydueof$1:n=4,i=10% Problem 15-8 (continued) (a) By Western Soya Co. (the lessee) Since at least one criterion is met, this is a capital lease to the lessee. WesternSoyarecordsthepresentvalueofminimumleasepaymentsasa leasedassetandaleaseliability. (b) By Rhone-Metro (the lessor) Requirement 3 December 31, 2009 Western Soya Co. (Lessee) Leased equipment (calculated above) ................................. Lease payable (calculated above) ................................... Lease payable ................................................................. Cash (lease payment) ..................................................... Rhone-Metro (Lessor) Lease receivable (calculated above) ................................... Inventory of equipment (lessor's cost) .......................... Cash (lease payment) ......................................................... Lease receivable ......................................................... 365,760 365,760 100,000 100,000 365,760 365,760 100,000 100,000 Sincethefairvalueequalsthelessor'scarryingvalue,thereisnodealer's profit,makingthisadirectfinancinglease. Problem 15-8 (continued) Requirement 4 Since both use the same discount rate and since the residual value is lesseeguaranteed, the same amortization schedule applies to both the lessee and lessor: Lease Amortization Schedule Dec. Payments 31 Effective Interest 10% x Outstanding Balance Decrease in Balance Outstanding Balance 2009 2009 2010 2011 2012 2013 100,000 100,000 100,000 100,000 25,000 425,000 .10 (265,760) .10 (192,336) .10 (111,570) .10 (22,727) = 26,576 = 19,234 = 11,157 = 2,273 59,240 100,000 73,424 80,766 88,843 22,727 365,760 365,760 265,760 192,336 111,570 22,727 0 Requirement 5 December 31, 2010 Western Soya Co. (Lessee) Interest expense (10% x [$365,760 100,000]) ....................... Lease payable (difference) ................................................ Cash (lease payment) .............................................
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This note was uploaded on 05/08/2010 for the course ACCTG 322 taught by Professor Gill during the Spring '08 term at San Diego State.

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