On June 30, 2018, Blue, Inc. leased a machine from Large Leasing Corporation. The lease...
90.2K
Verified Solution
Link Copied!
Question
Accounting
On June 30, 2018, Blue, Inc. leased a machine from Large Leasing Corporation. The lease agreement calls for Blue to make semiannual lease payments of $183,294 over a five-year lease term, payable each June 30 and December 31 , with the first payment at June 30,2018 . Blue's incremental borrowing rate is 12%, the same rate Big uses to calculate lease payment amounts. Depreciation is recorded on a straight-line basis at the end of each fiscal year. Large constructed the machine at a cost of $1,187,000. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1 ) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price at which Large is "selling" the machine (present value of the lease payments) at June 30,2018 (to the nearest $000 ). 2. What would be the amounts related to the lease that Large would report in its balance sheet at December 31, 2018? (Ignore taxes.) 3. What would be the amounts related to the lease that Large would report in its income statement for the year ended December 31 , 2018? (Ignore taxes.) (For all the requirements, round your answers to the nearest whole dollar amounts.)
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
