Exercise 21-2 (Part Level Submission) Pat Delaney Company leases an automobile w

Question

Exercise 21-2 (Part Level Submission) Pat Delaney Company leases an automobile with a fair value of $16,359 from John Simon Motors, Inc., on the following terms 1. Noncancelable term of 51 months. 2. Rental of S370 per month (at end of each month). (The present value at 1% per month is $14,725.) 3. Estimated residual value after 51 months is $1,160. (The present value at 1% 4. Estimated economic life of the automobile is 52 months. per month is $698.) Delaney Company gaar tees the reid al value of Sue. s. Delaney Company's incremental borrowing rate is 12% a year (1% a month), Simon's implicit rate is unknown. (b) D Your answer is correct What is the present value of the minimum lease payments? The present value of the minimum lease payments Click if you would like to Show Work for this questioni Open Show Work 15423

Explanation / Answer

Accounts Titles and Explanation Debit Credit Depreciation Expense 279.67 Accumulated depreciation 279.67 *Calculation : (Leased Equipment - Residule Value) / 51 months (15423 - 1160) / 51 14263 / 51 279.67

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