9) 0n December 31, 2018, Perry Corporastion leased equipment so Admiral Compuny

Question

9) 0n December 31, 2018, Perry Corporastion leased equipment so Admiral Compuny for a five-ycar peried The annual lease paryment, escluding nonlease components, is $40.000. The interest rate for payments are due on December 31 of eah normal cash price for this type of year. The first paymens was made on December 31, 2018. The equipment is $125,000 while the cost to Perry was $105,000. For the year ended December 31,2018, by what amount will Pery's canings increase due to this lease (ignore taves)? A) 520,000 B) S0 C)$24,000 D) $28.500 10) The costs that (a) are asociated directly with cansummating lane. (b) are essential bo acquire te kae. nd (c) would not have been incurred had the lease agreement not occurred, are referred to as initial direst costs Initial direct costs incurred by the lessor are defiomed and esponsed over the kase teme A) Ouly in a sales-type lease w ith no selling profit B) In both an operating lease and a sales-tope lease with no selling profi C) Oely in an opcrating lease D) Only in a sales-type lease with selling profi Co. for some equipment having a e date. Tinke does 11) On December 31, 2017,Reaan Inc signod a lease with Silver Lesing seven-year useful lifie. The lease payments ane made by Reagan annually, beginning at signing oot transfer to the lessee, so purchase eption, and Reagan garantoes a residual value to the lessor on termination of the lease the equipment will be renamed to the lesar on tecember 31,2023. There is so Reagan's lease amortination schodulk appcars below Decrease in Outstanding Dec. 31 Paymentsletcrest s 519.115 429,11 s 356280 90,000 17,165 s 90,000 5 90,000 5 90,000 s 90,000 s 36,000 72.835 75.749 8,779 81.930 85.207 34,613 8070 ,793 1,385 201,752 19,822 34.615 2021 2022 2023 At what amount would Reagan record the right-of-use asset at the beginning of the agrcement A) 5576,000 B) 5519,115 C5540,000. ) 3429.115

Explanation / Answer

9.

Fair value

$125000

Cost

$105000

profit

$20000

Note: Since the lease was signed on December 31, no interest is earned in 2018.

Fair value

$125000

Cost

$105000

profit

$20000

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