Exercise 21-6 (Part Level Submission) Bonita Company, a machinery dealer, leased
ID: 2564383 • Letter: E
Question
Exercise 21-6 (Part Level Submission)
Bonita Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2017. The lease is for an 8-year period and requires equal annual payments of $32,387 at the beginning of each year. The first payment is received on January 1, 2017. Bonita had purchased the machine during 2016 for $137,000. Collectibility of lease payments is reasonably predictable, and no important uncertainties surround the amount of costs yet to be incurred by Bonita. Bonita set the annual rental to ensure an 11% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Bonita at the termination of the lease.
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(a)
Exercise 21-6 (Part Level Submission)
Bonita Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2017. The lease is for an 8-year period and requires equal annual payments of $32,387 at the beginning of each year. The first payment is received on January 1, 2017. Bonita had purchased the machine during 2016 for $137,000. Collectibility of lease payments is reasonably predictable, and no important uncertainties surround the amount of costs yet to be incurred by Bonita. Bonita set the annual rental to ensure an 11% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Bonita at the termination of the lease.
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Explanation / Answer
The amount of the lease receivable = 32387*5.71220= 185001 Note: if answer is not rounded off it will be closes to $185000
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