Payments other than the periodic rental payments the

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Unformatted text preview: corded value lease payments recorded as a leased asset and a lease liability — is simply the present is value of periodic rental payments ($445,211). periodic Lessor: Even if residual value is not guaranteed, the lessor still expects if value to receive it in the form of property or cash (or both). in of property or cash (or both). Computation of lease payments is the same as with guaranteed the residual value. The amount of “Lease Receivable” is also the same as with “Lease is guaranteed residual value. But, Direct financing vs Sales-type Leases? Next slide financing vs Leases? Next 15-44 Slide 45 Residual Value Unguaranteed Assume that Lessee does not guarantee the Assume not $60,000 residual value $60,000 Direct Financing Lease – January 1, 2011 San Serif Publishers, Inc. (Lessee) Leased equipment 445,211 Lease payable 445,211 CompDec Corporation (Lessor) Lease receivable Inventory of equipment 479,079 479,079 15-45 Slide 46 Residual Value Unguaranteed Assume that Lessee does not guarantee the Assume not $60,000 residual value $60,000 Sales-Type Lease – January 1, 2011 San Serif Publishers, Inc. (Lessee) Leased equipment Lease payable 445,211 445,211 CompDec Corporation (Lessor) Lease receivable 479,079 Cost of goods sold ($300,000 – 33,868*) 266,132 Sales revenue ($479,079 – 33,868) 445,211 Inventory of equipment (lessor’s cost) 300,000 * 33,868 = PV of (unguaranteed) residual value 15-46 Slide 47 Part C: Executory Costs Executory costs include costs of ownership like Executory maintenance, insurance, taxes, and other costs. If the lease agreement makes the lessee responsible for the executory costs, they are treated as expenses by the lessee. expenses In some cases, the lessor pays executory costs, In and the lessee will reimburse the lessor through higher periodic lease payments. These costs are excluded in determining the minimum lease payment. minimum 15-47 Slide 48 Executory Costs - Example On January 1, 2011, Sans Serif Publishers, Inc., leased a co...
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This note was uploaded on 02/09/2013 for the course ACCOUNTING 3000 taught by Professor Li during the Spring '13 term at CUNY Brooklyn.

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