Wilson Foods Corporation leased a commercial food processor on September 30, 2018. The five-year finance...
90.2K
Verified Solution
Link Copied!
Question
Accounting
Wilson Foods Corporation leased a commercial food processor on September 30, 2018. The five-year finance lease agreement calls for Wilson to make quarterly lease payments of $234,929, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2018. Wilsons incremental borrowing rate is 12%. Wilson records depreciation on a straight-line basis at the end of each fiscal year. Wilson recorded the lease as follows: September 30, 2018 Right-of-use asset (calculated below) 3,600,000 Lease payable (calculated below) 3,600,000 Lease payable 234,929 Cash (first payment) 234,929 Calculation of the present value of lease payments $234,929 15.32380* = $3,600,000 (rounded) *Present value of an annuity due of $1: n = 20, i = 3% Required: What would be the pretax amounts related to the lease that Wilson would report in its statement of cash flows for the year ended December 31, 2018? (Cash outflows should be indicated by a minus sign. Do not round your intermediate calculations. Enter your answers in whole dollars.)
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!
