Exercise 4-10 points max Nelson Ltd. Signs a lease agreement for the building for $400,000...
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Exercise 4-10 points max Nelson Ltd. Signs a lease agreement for the building for $400,000 with the oil company. Fair value of the building at time of the sale was $400,000. The lease is a 10-year, noncancelable lease. Company uses straight-line depreciation for its other various business holdings. The economic life of the facility is 15 years with zero salvage value. Title to the facility and land will pass to Nelson ltd at termination of lease. A partial amortization schedule for this lease is as follows Payments Amortization Balance $400,000.00 374,901.87 347,293.93 316,925.19 Jan. 2, 2011 Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2013 $65,098.13 65,098.13 65,098.13 $40,000.00 37,490.19 34,729.39 $25,098.13 27,607.94 30,368.74 a) b) c) From the viewpoint of the lessor, what type of lease is involved above? What is the discount rate implicit in the amortization schedule presented above? What is the amount of the lessee's liability to the lessor after the December 31, 2013 payment? (Rounded to the nearest dollar.)
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