Ch21 solutions 2-3

Ch21 solutions 2-3 - CHAPTER 21 Accounting for Leases...

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CHAPTER 21 Accounting for Leases EXERCISE 21-2 (20–25 minutes) (a) To Delaney, the lessee, this lease is a capital lease because the terms satisfy the following criteria: 1. The lease term is greater than 75% of the economic life of the leased asset; that is, the lease term is 83 1 / 3 % (50/60) of the economic life. 2. The present value of the minimum lease payments is greater than 90% of the fair value of the leased asset; that is, the present value of $8,555 (see below) is 98% of the fair value of the leased asset: (b) The minimum lease payments in the case of a guaranteed residual value by the lessee include the guaranteed residual value. The present value therefore is: Monthly payment of $200 for 50 months. .......... $7,840 Residual value of $1,180. ..................................... 715 Present value of minimum lease payments. ...... $8,555 (c) Leased Property Under Capital Leases. ................... 8,555 Lease Liability. ...................................................... 8,555
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This note was uploaded on 09/20/2011 for the course ACC 319 taught by Professor Jones during the Fall '10 term at UNC Greensboro.

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Ch21 solutions 2-3 - CHAPTER 21 Accounting for Leases...

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