Lessee Company is a manufacturer of plastic toys. On Jan 1, 2010, the company signed a contract
Question:
Lessee Company is a manufacturer of plastic toys. On Jan 1, 2010, the company signed a contract to lease plastic extruding equipment from Lessor Company. The lease was for 5 years, commencing immediately on January 1, 2010. The annual lease payment was set at $19,000, and to be made at the beginning of each year.
Under the agreement, Lessee Company guaranteed that the leased equipment would be worth $8,000 when returned. The lessor's rate of return on the leasing arrangement was 8%, and this was known to the lessee.
Lessee Company had a year end of Dec. 31, and followed IFRS.
Required:
(1) Prepare an amortization table for Lessee Company for the lease
Financial Theory and Corporate Policy
ISBN: 978-0321127211
4th edition
Authors: Thomas E. Copeland, J. Fred Weston, Kuldeep Shastri