Sunland Corp., a lessee, entered into a non-cancellable lease agreement with Galt Manufacturing Ltd., a lessor,...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Sunland Corp., a lessee, entered into a non-cancellable lease agreement with Galt Manufacturing Ltd., a lessor, to lease special- purpose equipment for a period of seven years. Sunland follows IFRS and Galt follows ASPE. The following information relates to the agreement: Lease inception Annual lease payment due at the beginning of each lease year Residual value of equipment at end of lease term, guaranteed by an independent third party Economic life of equipment Usual selling price of equipment Manufacturing cost of equipment on lessor's books Lessor's implicit interest rate, known to lessee Lessee's incremental borrowing rate Repairs and maintenance per year to be paid by lessee, estimated May 2, 2023 $? $98,850 10 years $408,700 $322,300 12% 12% $14,170 The leased equipment reverts to Galt at the end of the lease, although Sunland has an option to purchase it at its expected fair value at that time. Calculate the lease payment determined by the lessor to provide a 12% return. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 5,275.) The lease payment $ (n) periods 2% 1 GAW NI 2 3 4 5 6 7 8 9 10 1.00000 1.98039 2.94156 3.88388 4.80773 16 17 18 19 20 21/2% 3% 5% 8% 15% 9% 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.97561 1.97087 1.96154 1.95238 1.94340 1.92593 1.91743 1.90909 1.90090 1.89286 1.86957 2.92742 2.91347 2.88609 2.85941 2.83339 2.78326 2.75911 2.73554 2.71252 2.69005 2.62571 3.85602 3.82861 3.77509 3.72325 3.67301 3.57710 3.53130 3.48685 3.44371 3.40183 3.28323 4.76197 4.71710 4.62990 4.54595 4.46511 4.31213 4.23972 4.16987 4.10245 4.03735 3.85498 4% 6% 5.71346 5.64583 5.57971 5.45182 5.32948 5.21236 4.99271 4.88965 6.60143 6.50813 6.41719 6.24214 6.07569 5.91732 5.62288 5.48592 7.47199 7.34939 7.23028 7.00205 6.78637 6.58238 6.20637 6.03295 8.32548 8.17014 8.01969 7.73274 7.46321 7.20979 6.74664 6.53482 9.16224 8.97087 8.78611 8.43533 8.10782 7.80169 7.24689 6.99525 10% 11% 21 17.35143 16.58916 15.87747 14.59033 13.46221 12.46992 10.81815 10.12855 22 18.01121 17.18455 16.41502 15.02916 13.82115 12.76408 11.01680 10.29224 23 18.65805 17.76541 16.93692 15.45112 14.16300 13.04158 11.20074 10.44243 24 19.29220 18.33211 17.44361 15.85684 14.48857 13.30338 11.37106 10.58021 25 19.91393 18.88499 17.93554 16.24696 14.79864 13.55036 11.52876 10.70661 12% 11 9.98259 9.75206 9.53020 9.11090 8.72173 8.36009 7.71008 7.41766 7.14457 6.88923 6.65022 6.01877 12 10.78685 10.51421 10.25262 9.76048 9.30641 8.88687 8.13896 7.80519 7.49506 7.20652 6.93770 6.23371 13 11.57534 11.25776 10.95400 10.38507 9.86325 9.38384 8.53608 8.16073 7.81369 7.49236 7.19437 6.42062 14 12.34837 11.98319 11.63496 10.98565 10.39357 9.85268 8.90378 8.48690 8.10336 7.74987 7.42355 6.58315 15 13.10625 12.69091 12.29607 11.56312 10.89864 10.29498 9.24424 8.78615 9.36669 7.98187 7.62817 6.72448 4.79079 4.69590 4.60478 4.35216 5.35526 5.23054 5.11141 4.78448 5.86842 5.71220 5.56376 5.16042 6.33493 6.14612 5.96764 5.48732 6.75902 6.53705 6.32825 5.77158 13.84926 13.38138 12.93794 12.11839 11.37966 10.71225 9.55948 9.06069 8.60608 8.19087 7.81086 6.84737 14.57771 14.05500 13.56110 12.65230 11.83777 11.10590 9.85137 9.31256 8.82371 8.37916 7.97399 6.95424 15.29187 14.71220 14.16612 13.16567 12.27407 11.47726 10.12164 9.54363 9.02155 8.54879 8.11963 7.04716 15.99203 15.35336 14.75351 13.65930 12.68959 11.82760 10.37189 9.75563 9.20141 8.70162 8.24967 7.12797 16.67846 15.97889 15.32380 14.13394 13.08532 12.15812 10.60360 9.95012 9.36492 8.83929 8.36578 7.19823 9.51356 8.96333 8.46944 7.25933 9.64869 9.07507 8.56200 7.31246 9.77154 9.17574 8.64465 7.35866 9.88322 9.26643 8.71843 7.39884 9.98474 9.34814 8.78432 7.43377 Sunland Corp., a lessee, entered into a non-cancellable lease agreement with Galt Manufacturing Ltd., a lessor, to lease special- purpose equipment for a period of seven years. Sunland follows IFRS and Galt follows ASPE. The following information relates to the agreement: Lease inception Annual lease payment due at the beginning of each lease year Residual value of equipment at end of lease term, guaranteed by an independent third party Economic life of equipment Usual selling price of equipment Manufacturing cost of equipment on lessor's books Lessor's implicit interest rate, known to lessee Lessee's incremental borrowing rate Repairs and maintenance per year to be paid by lessee, estimated May 2, 2023 $? $98,850 10 years $408,700 $322,300 12% 12% $14,170 The leased equipment reverts to Galt at the end of the lease, although Sunland has an option to purchase it at its expected fair value at that time. Calculate the lease payment determined by the lessor to provide a 12% return. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 5,275.) The lease payment $ (n) periods 2% 1 GAW NI 2 3 4 5 6 7 8 9 10 1.00000 1.98039 2.94156 3.88388 4.80773 16 17 18 19 20 21/2% 3% 5% 8% 15% 9% 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.97561 1.97087 1.96154 1.95238 1.94340 1.92593 1.91743 1.90909 1.90090 1.89286 1.86957 2.92742 2.91347 2.88609 2.85941 2.83339 2.78326 2.75911 2.73554 2.71252 2.69005 2.62571 3.85602 3.82861 3.77509 3.72325 3.67301 3.57710 3.53130 3.48685 3.44371 3.40183 3.28323 4.76197 4.71710 4.62990 4.54595 4.46511 4.31213 4.23972 4.16987 4.10245 4.03735 3.85498 4% 6% 5.71346 5.64583 5.57971 5.45182 5.32948 5.21236 4.99271 4.88965 6.60143 6.50813 6.41719 6.24214 6.07569 5.91732 5.62288 5.48592 7.47199 7.34939 7.23028 7.00205 6.78637 6.58238 6.20637 6.03295 8.32548 8.17014 8.01969 7.73274 7.46321 7.20979 6.74664 6.53482 9.16224 8.97087 8.78611 8.43533 8.10782 7.80169 7.24689 6.99525 10% 11% 21 17.35143 16.58916 15.87747 14.59033 13.46221 12.46992 10.81815 10.12855 22 18.01121 17.18455 16.41502 15.02916 13.82115 12.76408 11.01680 10.29224 23 18.65805 17.76541 16.93692 15.45112 14.16300 13.04158 11.20074 10.44243 24 19.29220 18.33211 17.44361 15.85684 14.48857 13.30338 11.37106 10.58021 25 19.91393 18.88499 17.93554 16.24696 14.79864 13.55036 11.52876 10.70661 12% 11 9.98259 9.75206 9.53020 9.11090 8.72173 8.36009 7.71008 7.41766 7.14457 6.88923 6.65022 6.01877 12 10.78685 10.51421 10.25262 9.76048 9.30641 8.88687 8.13896 7.80519 7.49506 7.20652 6.93770 6.23371 13 11.57534 11.25776 10.95400 10.38507 9.86325 9.38384 8.53608 8.16073 7.81369 7.49236 7.19437 6.42062 14 12.34837 11.98319 11.63496 10.98565 10.39357 9.85268 8.90378 8.48690 8.10336 7.74987 7.42355 6.58315 15 13.10625 12.69091 12.29607 11.56312 10.89864 10.29498 9.24424 8.78615 9.36669 7.98187 7.62817 6.72448 4.79079 4.69590 4.60478 4.35216 5.35526 5.23054 5.11141 4.78448 5.86842 5.71220 5.56376 5.16042 6.33493 6.14612 5.96764 5.48732 6.75902 6.53705 6.32825 5.77158 13.84926 13.38138 12.93794 12.11839 11.37966 10.71225 9.55948 9.06069 8.60608 8.19087 7.81086 6.84737 14.57771 14.05500 13.56110 12.65230 11.83777 11.10590 9.85137 9.31256 8.82371 8.37916 7.97399 6.95424 15.29187 14.71220 14.16612 13.16567 12.27407 11.47726 10.12164 9.54363 9.02155 8.54879 8.11963 7.04716 15.99203 15.35336 14.75351 13.65930 12.68959 11.82760 10.37189 9.75563 9.20141 8.70162 8.24967 7.12797 16.67846 15.97889 15.32380 14.13394 13.08532 12.15812 10.60360 9.95012 9.36492 8.83929 8.36578 7.19823 9.51356 8.96333 8.46944 7.25933 9.64869 9.07507 8.56200 7.31246 9.77154 9.17574 8.64465 7.35866 9.88322 9.26643 8.71843 7.39884 9.98474 9.34814 8.78432 7.43377
Expert Answer:
Related Book For
Financial Statement Analysis
ISBN: 978-0078110962
11th edition
Authors: K. R. Subramanyam, John Wild
Posted Date:
Students also viewed these accounting questions
-
Triangular, or arithmetic, distributed-lag model. This model assumes that the stimulus (explanatory variable) exerts its greatest impact in the current time period and then declines by equal...
-
Mulholland Corp., a lessee, entered into a non-cancellable lease agreement with Galt Manufacturing Ltd., a lessor, to lease special-purpose equipment for a period of seven years. Mulholland follows...
-
Mulholland Corp., a lessee, entered into a non-cancellable lease agreement with Galt Manufacturing Ltd., a lessor, to lease special purpose equipment for a period of seven years. Both Mulholland and...
-
In a perpetual inventory system: (a) LIFO cost of goods sold will be the same as in a periodic inventory system. (b) average costs are a simple average of unit costs incurred. (c) a new average is...
-
According to supply-side economists, what will be the long-run impact on prices of a reduction in income tax rates?
-
A projectile is fired with initial speed v0 at an elevation angle of a up a hill of slope (a > ). (a) How far up the hill will the projectile land? (b) At what angle a will the range be a maximum?...
-
What are the main advantages and disadvantages of fixing the exchange rate with a major currency such as the US dollar?
-
Indicate whether the following actions would (+) increase, (-) decrease, or (0) not affect Indigo Inc.'s total assets, liabilities, and stockholders' equity: Stockholders' Equity Assets Liabilities...
-
What strategies can management implement to address future reoccurrences of antitrust law violations within their company?
-
Product X is a consumer product with a retail price of $12.95. Retailers margins on the product are 40% and wholesalers margins are 8% (based on the selling price). Total retail size of the market in...
-
6. At time t = 0 a tank contains 0.05 lb. of salt dissolved in 100 gal of water. Assume that water containing 14 lb. of salt per gallon is entering the tank at a rate of 3 gal/min, and that the...
-
The surface area of a right circular cone is given by : A = r (r + h + r Write a Java program to calculate the surface area of a cone with radius 5cm and height 12 cm.
-
Company A has been successful in the market this year and now wishes to purchase their competitor company, Company B. Company B has a number of employees working who are currently on F-1 status -...
-
Joy Inc. repurchases 300 common shares and holds them in treasury on December 1, 2015. Assume the average issue price of the outstanding shares is $10 and that prior to this repurchase the amount of...
-
The COVID-19 pandemic has had a very significant impact on the construction industry. Therefore, the use of construction technology needs to be fully utilized to boost this industry. Discuss the...
-
An investment fund has a balance of 100 at the beginning of the year (i.e. t = 0) and a balance of 145 at the end of the year (i.e. t = 1). A contribution of size K is made at time t = 1/3. The...
-
You are provided with the following apparatus. a Convex lens A candle White screen Lens holder Metre rule Set up the apparatus as shown in the figure below. Place a lighted candle at object distance,...
-
Hardin Services Co. experienced the following events in 2016: 1. Provided services on account. 2. Collected cash for accounts receivable. 3. Attempted to collect an account and, when unsuccessful,...
-
How should we treat deferred income taxes in an analysis of capital structure?
-
Describe the criteria a company must meet before a transfer of receivables with recourse can be booked as a sale rather than as a loan.
-
Explain when costs should be recognized as expenses.
-
Lewis Edwards decides to branch out on his own and set up his own private practice as an accountant. Events occurring in March 2019 are as follows. Ignore GST. Required (a) After analyzing the events...
-
On 1 March 2017, James Taylor decided to open Taylors Tailormade that makes suits, trousers and jackets, and repairs and alters clothes. He contributed for this purpose sewing equipment $46 000 and a...
-
In December 2019, Mike Mills opened a miniature golf course to cater for the summer holiday tourists and completed the transactions below during its first month of operations. For the sake of...
Study smarter with the SolutionInn App