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http://edugen.wileyplus.com/edugen/student/mainfr.uni What is a not-for-profit - A.. Exercise 11-1 Deluxe Ezra C... WileyPLUS Exercise 21-10 Morgan Leasing. abouttabs What is a not-for-profit - A...What is a not-for-profit-A...What is a not-for-profit - A...What is a not-for-profit-A... WileyPLUS: MyWileyPLUS | Help I Contact Us | Log Out WileyPLUS Kieso, Intermediate Accounting, 15e INTERMEDIATE ACCOUNTING (BA311-312) Home Read, Study& Practice Assignment Gradebook ORION Assignment > Open Assignment CALCULATOR FULL SCREEN PRINTER VERSION BACK ASSIGNMENT RESOURCES Chapter 21 Homework Exercise 21-10 Morgan Leasing Company signs an agreement on January 1, 2014, to lease equipment to Cole Company. The following information relates to this agreement. Brief Exercise 21-2 Brief Exercise 21-3 Brief Exercise 21-4 Brief Exercise 21-8 Exercise 21-1 Exercise 21-4 Exercise 21-5 Exercise 21-10 1. The term of the noncancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6 years 2. The cost of the asset to the lessor is $245,600. The fair value of the asset at January 1, 2014, is $245,600 3. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $73,203, none of which is guaranteed. 4. Cole Company assumes direct responsibility for all executory costs. 5. The agreement requires equal annual rental payments, beginning on January 1, 2014. 6. Collectibility of the lease payments is reasonably predictable. There are no important uncertainties surrounding the amount of costs yet to be incurred by the lessor. TABLE 6-2 PRESENT VALUE OF 1 Review Score Review Results b Study Obiective 15% 86957 75614 65752 57175 49718 10% Periods 92593 91743 84168 77218 69286 79719 81162 73119 65873 59345 2 3 75132 63552 58743 64993 5 63017 58349 54027 50025 46319 59627 54703 50187 56447 51316 37594 32690 24719 21494 42410 39092 35218 42241 32197 31728 28584 38753 28748 39711 31863 18691 12:54 AM 4/9/2016 0

Explanation / Answer

Part 1)

The annual rental payment is calculated with the use of following table:

__________

Part B)

The amortization schedule is given below:

There can be a slight difference in answer on account of rounding off values.

__________

Part C)

The journal entries are as follows:

Expected Residual Value (A) 73,203 Present Value Interest Factor at 10% for 6 Years (B) 0.56447 Present Value of Expected Residual Value (A*B) 41,321 Fair Market Value of Leased Equipment 245,600 Less Present Value of Expected Residual Value 41,321 Amount to be Realized through Lease Payments (A) 204,279 Present Value Interest Factor for Annuity Due at 10% for 6 Years (B) 4.79079 Amount of Annual Payment Required (A/B) $42,640

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