Repeal the requirements of BE 18-9 for the lessor, Perry Leasing assuming that Perry is an IFRS
Question:
Repeal the requirements of BE 18-9 for the lessor, Perry Leasing assuming that Perry is an IFRS reporter. Perry is not a dealer.
Data from BE 18-9
Jenkins Manufacturing Company leased a piece of nonspecialized machinery for use in its operations from Perry Leasing on January 1. The 10-year lease requires lease payments of $4,000 due on January 1 of each year. The machinery is estimated to have a 10-year life, is depreciated on the straight-line method, and will have no residual value at the end of the lease term. The present value of the lease payments using 11.2% and the asset's fair value on the date the lease is signed both equal $25,977. Perry paid fair value to acquire the equipment the day before lease commencement.
The lessor's implicit rate of 11.2% is known to Jenkins. Collection of all lease payments is reasonably assured.
Step by Step Answer:
Intermediate Accounting
ISBN: 978-0134730370
2nd edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella