Calculate the amount of the annual rental payment required

Assignment Help Accounting Basics
Reference no: EM133116462

Question - Teal Mountain Leasing Company signs an agreement on January 1, 2020, to lease equipment to Cole Company. The following information relates to this agreement.

1. The term of the non-cancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6 years.

2. The cost of the asset to the lessor is $341,000. The fair value of the asset at January 1, 2020, is $341,000.

3. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $20,010, none of which is guaranteed.

4. The agreement requires equal annual rental payments, beginning on January 1, 2020.

5. Collectibility of the lease payments by Teal Mountain is probable.

Required -

(a) Assuming the lessor desires a 12% rate of return on its investment, calculate the amount of the annual rental payment required.

(b) Prepare an amortization schedule that is suitable for the lessor for the lease term.

(c) Prepare all of the journal entries for the lessor for 2020 and 2021 to record the lease agreement, the receipt of lease payments, and the recognition of revenue. Assume the lessor's annual accounting period ends on December 31, and it does not use reversing entries.

Reference no: EM133116462

Questions Cloud

What were the total collections on account : The Accounts Receivable account has a beginning balance of $38500 and an ending balance of $54800. What were the total collections on account
What is the first political event you can remember : What is the first political event you can remember and How did the adults in your household react? How did this impact you?
Biggest security concerns or concepts of cloud operations : Which you analyze three of the biggest security concerns, measures, or concepts of cloud operations.
Why does a company go for share buyback : Why does a company go for share buyback? How does the 100% share buyback impact the Board of Directors?
Calculate the amount of the annual rental payment required : Assuming the lessor desires a 12% rate of return on its investment, calculate the amount of the annual rental payment required
Argument supporting best practice to proactively mitigate : How did the attack happen? What is an argument supporting best practice to proactively mitigate or eliminate the onset of an attack?
Overall opinion on the cost of capital : 1. What is your overall opinion on the Cost of Capital?
Modern portfolio theory : Modern Portfolio Theory (MPT) developed by Harry Mamowitz in 1952 now shows "its age". Today's ?nancial markets are driven by factors that were nonexistent and
Credit default swap premium : Explain what is meant by a 5-year credit default swap (CDS) premium on Company XYZ and what a CDS premium of 300 basis points on its debt would mean assuming th

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd