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WINSTONCH [101]
4 years ago
5

ClevelandInc. leased a new crane to Abriendo Construction under a 5-year, non-cancelable contract starting January 1, 2020. Term

s of the lease require payments of $48,555 each January 1, starting January 1, 2020. The crane has an estimated life of 7 years, a fair value of $240,000, and a cost to Cleveland of $240,000. The estimated fair value of the crane is expected to be $45,000 (unguaranteed) at the end of the lease term. No bargain purchase or renewal options are included in the contract, and it is not a specialized asset. Both Cleveland and Abriendo adjust and close books annually at December 31. Collectibility of the lease payments is probable. Abriendo’s incremental borrowing rate is 8%, and Cleveland’s implicit interest rate of 8% is known to Abriendo. Discuss what should be presented in the balance sheet, the income statement, and the related notes of both the lessee and the lessor at December 31, 2020.
Business
1 answer:
Sophie [7]4 years ago
8 0

Answer:

The correct answer is "2,40,000". The further explanation is given below.

Explanation:

The given fair value is:

= $240,000

The presentation in books of lessee will be:

⇒  Record \ of \ assets =PV \ of \ Lease \ Payment +Unguaranteed \ residual \ value

⇒  Annuity \ value \ of \ 8 \ percent \5 \ year\times 48555+Anuity \ value \ of \ 5th \ year\times 45000

On putting the values, we get

⇒  3.9927\times 48555+0.6806\times 45000

⇒  193865.54+30627

⇒  224492.54 \ i.e., 2,24,493 ($)

Presentation in books of Lessor , the fair value of assets will be

=  2,40,000 ($)

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Problem 3-51 (LO 3-4) (Algo) Skip to question [The following information applies to the questions displayed below.] Tawana owns
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The amount of her pretax income that it currently take Tawana to generate the $9,500 (after-taxes) given to Jonathon is $15,079.

<h3>Pretax income </h3>

Using this formula

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Where:

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Let plug in the formula

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6 0
3 years ago
What is the future value of $12,000 after 5 years if the appropriate interest rate is 6%, compounded semiannually?
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Answer:

FV = $16126.99655 rounded off to $16127

Explanation:

To calculate the future value of a sum of money, we simply multiply the present value by (1 + interest rate) for the period of time that we require the amount to be compounded. Thus, the formula for the future value of a sum of amount with annual compounding is,

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Where,

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  • i is the interest rate
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For semi annual compounding, we simply divide the annual i by 2 and multiply the t by 2. So, Future value of an amount with semi annual compounding will be,

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