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Chapter%2015%20Homework%20Solutions

# Chapter%2015%20Homework%20Solutions - ACCT4050 1523(a...

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ACCT 4050 Chapter 15 Solutions 15–23. (a) Capital lease . ............... Contains a bargain purchase option. (b) Operating lease . .......... \$67,000 present value of lease payments divided by \$75,000 fair value of equipment = 89%. This is less than the 90% cutoff, so it is an operating lease. (c) Capital lease . ............... Ownership transfers to lessee at end of lease term. (d) Operating lease . .......... An 8-year lease period divided by 12-year economic life = 67%. This is below the 75% cutoff for lease term, so it is an operating lease. (e) Operating lease . .......... Present value of lease payments is \$24,211*; \$24,211/\$28,000 = 86.5%. This is less than the 90% cutoff, so it is an operating lease. *PV n = \$9,000 + \$9,000(Table IV 212% ) PV n = \$9,000 + \$9,000(1.6901) PV n = \$24,211 or with a business calculator: First toggle so that the payments are assumed to occur at the beginning (BEG) of the period. PMT = \$9,000; N = 3; I = 12% PV = \$24,210 (f) Capital lease . ............... Present value of lease payments: \$5,500 + (\$5,500 1.7355) = \$15,045; \$15,045/\$16,650 = 90.4%. This is more than the 90% cutoff, so it is a capital lease. or with a business calculator: First toggle so that the payments are assumed to occur at the beginning (BEG) of the period. PMT = \$5,500; N = 3; I = 10% PV = \$15,045

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ACCT 4050 Chapter 15 Solutions 15–26. Computation of present value of lease: PV n = \$290,000 + \$290,000(PVAF 14 10% ) PV n = \$290,000 + \$290,000(7.3667) PV n = \$2,426,343 or with a business calculator: First toggle so that the payments are assumed to occur at the beginning (BEG) of the period. PMT = \$290,000; N = 15; I = 10% PV = \$2,426,339 2011 Jan. 1 Leased Equipment . ........................................ 2,426,343 Obligations under Capital Leases . ........... 2,426,343 To record lease. 1 Lease Expense . .............................................. 20,000 Obligations under Capital Leases . ............... 290,000 Cash ........................................................ 310,000 To record first lease payment. Dec. 31
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Chapter%2015%20Homework%20Solutions - ACCT4050 1523(a...

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