Videos-to-Go signed a lease for a vehicle that had an expected economic life of eight years...

 

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Videos-to-Go signed a lease for a vehicle that had an expected economic life of eight years and a fair value of $12,700. The lessor is the leasing subsidiary of a national car manufacturer. The terms of the lease are as follows: • The lease term begins on 1 January 20X2 and runs for five years. The lease requires payments of $4,600 each 1 January, including $1,800 for maintenance and insurance costs. . At the end of the lease term, the lease is renewable for three one-year periods at $600 per year. The normal rental costs for a similar used vehicle would be approximately double this amount. . At the end of any lease term the vehicle reverts to the lessor. Videos-to-Go does not know the interest rate implicit in the lease from the lessor's perspective but has an incremental borrowing rate of 12%. Videos-to-Go has a 31 December year-end and uses straight-line depreciation for all assets. (Round intermediate calculations and final answers to the nearest whole dollar amount.) (PV of $1. PVA of $1. and PVAD of $1.) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare a lease liability amortization schedule. Lease Year 20x2 20x3 20X4 20x5 20x6 20x7 20x8 Lease Amortization Schedule - Beginning of Lease Year Payments 1 January Interest Inc/(Dec) in Balance Payment Opening Balance 5 12,910 Ending Balance Videos-to-Go signed a lease for a vehicle that had an expected economic life of eight years and a fair value of $12,700. The lessor is the leasing subsidiary of a national car manufacturer. The terms of the lease are as follows: • The lease term begins on 1 January 20X2 and runs for five years. The lease requires payments of $4,600 each 1 January, including $1,800 for maintenance and insurance costs. . At the end of the lease term, the lease is renewable for three one-year periods at $600 per year. The normal rental costs for a similar used vehicle would be approximately double this amount. . At the end of any lease term the vehicle reverts to the lessor. Videos-to-Go does not know the interest rate implicit in the lease from the lessor's perspective but has an incremental borrowing rate of 12%. Videos-to-Go has a 31 December year-end and uses straight-line depreciation for all assets. (Round intermediate calculations and final answers to the nearest whole dollar amount.) (PV of $1. PVA of $1. and PVAD of $1.) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare a lease liability amortization schedule. Lease Year 20x2 20x3 20X4 20x5 20x6 20x7 20x8 Lease Amortization Schedule - Beginning of Lease Year Payments 1 January Interest Inc/(Dec) in Balance Payment Opening Balance 5 12,910 Ending Balance

Answer rating: 100% (QA)

The Leased Asset and liability both are recorded in the books of the lessee at the value of Present ... View the full answer