Exercise 10-8 (Algorithmic)
Financial Statement Impact of a Lease
George\'s Warehouse signed a six-year capital lease on January 1, 2012, with payments due every December 31. Interest is calculated annually at 10%, and the present value of the minimum lease payments is $11,220.
Required:
1. Calculate the amount of the annual payment that George\'s must make every December 31. Refer to the tables above for present value factors. Round your answer to the nearest whole dollar.
Lease payment, December 31:
$(______) per year ?
2. Calculate the amount of the lease obligation that would be presented on the December 31, 2013, balance sheet (after two lease payments have been made). Round your calculations and answer to the nearest cent.
Lease obligation, December 31, 2013:
$(_______) ?
____________________________________________________________________________________________
Exercise 10-8 (Algorithmic)
Financial Statement Impact of a Lease
George\'s Warehouse signed a six-year capital lease on January 1, 2012, with payments due every December 31. Interest is calculated annually at 10%, and the present value of the minimum lease payments is $14,470.
Required:
1. Calculate the amount of the annual payment that George\'s must make every December 31. Refer to the tables above for present value factors. Round your answer to the nearest whole dollar.
Lease payment, December 31:
$(______) per year ?
2. Calculate the amount of the lease obligation that would be presented on the December 31, 2013, balance sheet (after two lease payments have been made). Round your calculations and answer to the nearest cent.
Lease obligation, December 31, 2013:
$(______)
Solution
CALCULATION OF LEASE PAYMENT
2)
.
Exercise 10-8 (Algorithmic) Financial Statement Impact of a Lease Geor.docx
1. Exercise 10-8 (Algorithmic)
Financial Statement Impact of a Lease
George's Warehouse signed a six-year capital lease on January 1, 2012, with payments due
every December 31. Interest is calculated annually at 10%, and the present value of the minimum
lease payments is $11,220.
Required:
1. Calculate the amount of the annual payment that George's must make every December 31.
Refer to the tables above for present value factors. Round your answer to the nearest whole
dollar.
Lease payment, December 31:
$(______) per year ?
2. Calculate the amount of the lease obligation that would be presented on the December 31,
2013, balance sheet (after two lease payments have been made). Round your calculations and
answer to the nearest cent.
Lease obligation, December 31, 2013:
$(_______) ?
______________________________________________________________________________
______________
Exercise 10-8 (Algorithmic)
Financial Statement Impact of a Lease
George's Warehouse signed a six-year capital lease on January 1, 2012, with payments due
every December 31. Interest is calculated annually at 10%, and the present value of the minimum
lease payments is $14,470.
Required:
1. Calculate the amount of the annual payment that George's must make every December 31.
Refer to the tables above for present value factors. Round your answer to the nearest whole
dollar.
Lease payment, December 31:
$(______) per year ?
2. Calculate the amount of the lease obligation that would be presented on the December 31,
2013, balance sheet (after two lease payments have been made). Round your calculations and
answer to the nearest cent.
2. Lease obligation, December 31, 2013:
$(______)
Solution
CALCULATION OF LEASE PAYMENT
2)
Year PV of Lease Payment PV Factor @ 10% Actual Payment (Payment/ PV Factor)
1 11365 .909 12503
2 11365 .826 13759
3 11365 .751 15133
4 11365 .683 16640
5 11365 .620 18331
6 11365 .564 20151
Total 4.353 96517
