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Lease term |
5 years, no renewal option |
Remaining economic life of the leased equipment |
6 years |
Purchase option |
None |
Annual lease payments |
$1,100 |
Payment date |
Annually on January 1 (first payment is made at lease commencement) |
Fair value of the leased equipment at commencement |
$5,000 |
Lessor Corp’s carrying value of the leased equipment |
$4,500 |
Rate implicit in the lease |
7.04% |
Other |
|
Present value of the lease receivable
|
$3,722
|
Plus, the lease payment received at lease commencement
|
1,100
|
Less, the carrying value of leased asset ($4,500) net of unguaranteed residual asset ($178)
|
(4,322)
|
Selling profit
|
$500
|
Payment |
Interest income |
Lease receivable |
|
Lease commencement |
$3,722 |
||
Year 1 |
* |
$262 |
3,984 |
Year 2 |
1,100 |
203 |
3,087 |
Year 3 |
1,100 |
140 |
2,127 |
Year 4 |
1,100 |
73 |
1,100 |
Year 5 |
1,100 |
— |
— |
$4,400 |
$678 |
Accretion |
Residual asset |
|
Lease commencement |
$178 |
|
Year 1 |
$13 |
191 |
Year 2 |
13 |
204 |
Year 3 |
14 |
218 |
Year 4 |
15 |
233 |
Year 5 |
17 |
250 |
$72 |
Lease term |
3 years, no renewal option |
Remaining economic life of the automobile |
6 years |
Fair value of the automobile at commencement |
$30,000 |
Lessor Corp’s carrying value of the automobile at commencement |
$30,000 |
Purchase option |
Lessee Corp has the option to purchase the automobile at fair market value upon expiration of the lease. |
Monthly lease payments |
$500 for the first year $550 for the second year $600 for the third year |
Payment date |
Beginning of the month (first payment is made at lease commencement) |
Rate implicit in the lease |
8% |
Other |
|
Monthly rent |
Annual total |
||
Year 1 |
$500 |
$6,000 |
|
Year 2 |
550 |
6,600 |
|
Year 3 |
600 |
7,200 |
|
$19,800 |
|||
Number of periods |
36 |
||
Straight-line rent per period |
$550 |
Cash payments (A) |
Straight-line income (B) |
Increase (decrease) (B – A) |
Deferred rental receivable balance |
|
Commencement |
$ — |
|||
Year 1 |
$6,000 |
$6,600 |
$600 |
600 |
Year 2 |
6,600 |
6,600 |
— |
600 |
Year 3 |
7,200 |
6,600 |
(600) |
— |
$19,800 |
$19,800 |
$ — |
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