Reference no: EM132825400

Question - Weber Inc. wants to lease machinery costing $55,000 from Global Filter Corp. using a capital lease. The lease would begin on November 1, 2017, and Weber Inc. would pay all executor costs and assume all risks and rewards of ownership. Weber Inc. has an incremental borrowing rate of 11%, and would like the lease over 4 years. The machinery is not expected to have any residual value after that time period. Weber Inc.'s year end is December 31, amortizes depreciation using the straight-line method, and records part-year depreciation per month, in the year the asset is acquired.

Global Filter Corp. agrees with Weber Inc.'s four-year-term request, and offers beginning-of-the-year lease payments of $14,600, or end-of-the-year payments of $16,200.

Please make sure your final answer(s) are accurate to 2 decimal places.

a) Calculate the NPV (net present value) with payments at the beginning of each period.

b) Calculate the NPV with payments at the end of each period.

c) Complete the amortization table below for payments at the beginning.

d) Provide journal entries for the lessee for 2017 assuming that Global Filter Corp. accepts the lease with the $16,200 payments. Enter an appropriate description, and enter the date in the format dd/mmm (ie. 15/Jan).