Solution-What is majestic lease liability after first lease

What is majestic lease liability after first lease payment

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Reference no: EM133150090

Question - On January 1, 2021, Majestic Mantles leased a lathe from Equipment Leasing under a finance lease. Lease payments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by Majestic. Portions of the Equipment Leasing's lease amortization schedule appear below:

Jan. 1	Payments	Effective Interest	Decrease in Balance	Outstanding Balance
				236,474
2021	26,000		26,000	210,474
2022	26,000	22,100	3,900	206,574
2023	26,000	21,690	4,310	202,264
2024	26,000	21,238	4,762	197,502
2025	26,000	20,738	5,262	192,240
2026	26,000	20,185	5,815	186,425
2027	26,000	19,575	6,425	179,999
-	-	-	-	-
-	-	-	-	-
-	-	-	-	-
2038	26,000	6,730	19,270	44,823
2039	26,000	4,706	21,294	23,529
2040	26,000	2,471	23,529	0

Required -

1. What is Majestic's lease liability after the first lease payment?

2. What amount would Majestic record as a right-of-use asset?

3. What is the lease term in years?

4. What is the effective annual interest rate?

5. What is the total amount of lease payments?

6. What is the total effective interest expense recorded over the term of the lease?

Reference no: EM133150090

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What is majestic lease liability after first lease payment

Reference no: EM133150090

Reference no: EM133150090

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