Medical imaging Co. leased equipment to Family Care, Inc for 10 years beginning on January 1,...

  

 

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Medical imaging Co. leased equipment to Family Care, Inc for 10 years beginning on January 1, Year 1. The first lease payment of S12.000 was made on Jamary 1, Year 1 with all subsequent lease payments due annually on December 31 st. The equipment has an estimated useful life of 12 years and its fair value is equal to the present value of the minimum lease payments. The interest rate implicit in the lease is 10% and is known to Family Care. Inc. Family Care Inc's incremental borrowing rate is 11%. At the end of the lense term, Family Care Ine. does not have the option to purchase the equipment and ownership will not transfer. Present value amounts: PV of an anmuity due of S1 for 10 periods at 10% 6.759 PV of an annuity due of S1 for 10 periods at 11% 6.537 Z. What type of lease will this transaction be accounted for by the lease? a. Operating lease b Capital lease because only the 75% teat has been satisfied. e Capital tease because both the 75% and 90% test have been satisfied d Capital loase because only the 90% test has been satisified N. What interest rate is used in computing the present value of the lease paymentt Always ase the lessor's borrowing rate Always use the lessee's borrowing rate e Alwys Ane the greater of the lessor or lesssee borrowing rate. t Ahvays se the lower of the lessor or lessee borrowing rate What is the presnt value of the minimimi ler permiente at the inceptin f the lae 4. A 019 10 Uing the efluctive method what is the portinin of the periodie ane paymen thet appliet interest at 1201/ Year I7 S IZ000 d. S 11 Daing raighi line depreciation what is the anal depreciation dharge S6759.00 E S12.000 00 it 57.650 00 Medical imaging Co. leased equipment to Family Care, Inc for 10 years beginning on January 1, Year 1. The first lease payment of S12.000 was made on Jamary 1, Year 1 with all subsequent lease payments due annually on December 31 st. The equipment has an estimated useful life of 12 years and its fair value is equal to the present value of the minimum lease payments. The interest rate implicit in the lease is 10% and is known to Family Care. Inc. Family Care Inc's incremental borrowing rate is 11%. At the end of the lense term, Family Care Ine. does not have the option to purchase the equipment and ownership will not transfer. Present value amounts: PV of an anmuity due of S1 for 10 periods at 10% 6.759 PV of an annuity due of S1 for 10 periods at 11% 6.537 Z. What type of lease will this transaction be accounted for by the lease? a. Operating lease b Capital lease because only the 75% teat has been satisfied. e Capital tease because both the 75% and 90% test have been satisfied d Capital loase because only the 90% test has been satisified N. What interest rate is used in computing the present value of the lease paymentt Always ase the lessor's borrowing rate Always use the lessee's borrowing rate e Alwys Ane the greater of the lessor or lesssee borrowing rate. t Ahvays se the lower of the lessor or lessee borrowing rate What is the presnt value of the minimimi ler permiente at the inceptin f the lae 4. A 019 10 Uing the efluctive method what is the portinin of the periodie ane paymen thet appliet interest at 1201/ Year I7 S IZ000 d. S 11 Daing raighi line depreciation what is the anal depreciation dharge S6759.00 E S12.000 00 it 57.650 00

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