On January 1, 2020, Lessee Inc. leased equipment at an annual payment of $144,668 payable at...

 

 

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On January 1, 2020, Lessee Inc. leased equipment at an annual payment of $144,668 payable at the beginning of each year for 4 years. The equipment had a fair value of $680,000, a book value of $637,500, and was commonly purchased or leased by customers. The lessor estimates that the equipment has an estimated useful life of 8 years and an estimated residual value of $212,500, not guaranteed by the lessee. Lessor's implicit rate is 7.5%, which is unknown to the lessee. The lessee's incremental borrowing rate is 8%. The lease does not contain a purchase option or a renewal option. The lessee had no other costs associated with this lease. Required a. Recalculate the lessor's lease payment. Note: Round answer to the nearest dollar. • Note: Do not use a negative sign with your answer. Lease payment $ 0 b. Prepare the entries for the lessor for 2020, assuming that the lessor uses the straight-line method to depreciate fixed assets. Date Account Name Dr. Cr. Jan. 1, 2020 0 0 0 0 To record receipt of lease payment Dec. 31, 2020 0 0 To record revenue Dec. 31, 2020 0 0 To record depreciation 4 45 AP + 4 0 0 0 0 c. If the lessor incurred a commission to secure the acceptance of the lease agreement for $1,700, what entry would be required by the lessor on January 1, 2020, and December 31, 2020? Account Name Dr. Cr. Date Jan. 1, 2020 + 0 0 + 0 0 Dec. 31, 2020 + 0 0 + 0 0 d. How would the lease payment and accounting for the lease be affected for the lessor if the lessee guaranteed a residual value of $136,000? Lease classification considering guaranteed residual value + On January 1, 2020, Lessee Inc. leased equipment at an annual payment of $144,668 payable at the beginning of each year for 4 years. The equipment had a fair value of $680,000, a book value of $637,500, and was commonly purchased or leased by customers. The lessor estimates that the equipment has an estimated useful life of 8 years and an estimated residual value of $212,500, not guaranteed by the lessee. Lessor's implicit rate is 7.5%, which is unknown to the lessee. The lessee's incremental borrowing rate is 8%. The lease does not contain a purchase option or a renewal option. The lessee had no other costs associated with this lease. Required a. Recalculate the lessor's lease payment. Note: Round answer to the nearest dollar. • Note: Do not use a negative sign with your answer. Lease payment $ 0 b. Prepare the entries for the lessor for 2020, assuming that the lessor uses the straight-line method to depreciate fixed assets. Date Account Name Dr. Cr. Jan. 1, 2020 0 0 0 0 To record receipt of lease payment Dec. 31, 2020 0 0 To record revenue Dec. 31, 2020 0 0 To record depreciation 4 45 AP + 4 0 0 0 0 c. If the lessor incurred a commission to secure the acceptance of the lease agreement for $1,700, what entry would be required by the lessor on January 1, 2020, and December 31, 2020? Account Name Dr. Cr. Date Jan. 1, 2020 + 0 0 + 0 0 Dec. 31, 2020 + 0 0 + 0 0 d. How would the lease payment and accounting for the lease be affected for the lessor if the lessee guaranteed a residual value of $136,000? Lease classification considering guaranteed residual value +

Answer rating: 100% (QA)

A The lease payment amount is calculated by using the formula Lease payment Depreciation fee Finance ... View the full answer