SHOW LIST OF ACCOUNTS SHOW SOLUTION LINK TO TEXT MOONEY LEASING COMPANY (Lessor)

Question

SHOW LIST OF ACCOUNTS

SHOW SOLUTION

LINK TO TEXT

MOONEY LEASING COMPANY (Lessor)
Lease Amortization Schedule

Date

Annual Lease Payment Plus
BPO

Interest on Lease
Receivable

Recovery of Lease
Receivable

Lease Receivable

SHOW LIST OF ACCOUNTS

LINK TO TEXT

Date

Account Titles and Explanation

Debit

Credit

5/1/14

(To record the lease.)

(To record lease payment. )

12/31/14

5/1/15

12/31/15

5/1/16

12/31/16

The following facts pertain to a noncancelable lease agreement between Mooney Leasing Company and Rode Company, a lessee.
Inception date: May 1, 2014 Annual lease payment due at the beginning of    each year, beginning with May 1, 2014 $21,227.60 Bargain-purchase option price at end of lease term $4,000 Lease term 5 years Economic life of leased equipment 10 years Lessor’s cost $65,000 Fair value of asset at May 1, 2014 $91,000 Lessor’s implicit rate 10 % Lessee’s incremental borrowing rate 10 %
The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor. The lessee assumes responsibility for all executory costs.

Explanation / Answer

or 91000  

1. PV of 5 annual lease payments 21227.6*4.16987= 88516.33 (PVOA due 10%, 5 yrs.=4.16987) Add: PV Bargain Purchase Option (4000/1.1^5) 2483.69 Total PV of lease receivable at inception 91000.02

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.