Werner Chemical, Inc., leased a protein analyzer on September30, 2016. The five-year lease agreement calls for Werner to makequarterly lease payments of $371,971, payable each September 30,December 31, March 31, June 30, with the first payment at September30, 2016. Werner's incremental borrowing rate is 12%. Depreciationis recorded on a straight-line basis at the end of each fiscalyear. The useful life of the equipment is five years. (FV of $1, PVof $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)(Use appropriate factor(s) from the tablesprovided.)
Required:
1. Determine the present value of the lease payments at September30, 2016.
2. What amounts related to the lease wouldWerner report in its balance sheet at December 31, 2016 (ignoretaxes)?
liability:
assett:
3. What amounts related to the lease wouldWerner report in its income statement for the year ended December31, 2016 (ignore taxes)?
total expenses:
4.What amounts related to the lease wouldWerner report in its statement of cash flows for the year endedDecember 31, 2016 (ignore taxes)?
Capital Lease Interest Portion Principal Portion
Werner Chemical, Inc., leased a protein analyzer on September30, 2016. The five-year lease agreement calls for Werner to makequarterly lease payments of $371,971, payable each September 30,December 31, March 31, June 30, with the first payment at September30, 2016. Werner's incremental borrowing rate is 12%. Depreciationis recorded on a straight-line basis at the end of each fiscalyear. The useful life of the equipment is five years. (FV of $1, PVof $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)(Use appropriate factor(s) from the tablesprovided.) |
| Required: |
| 1. | Determine the present value of the lease payments at September30, 2016. |
2. What amounts related to the lease wouldWerner report in its balance sheet at December 31, 2016 (ignoretaxes)?
liability:
assett:
3. What amounts related to the lease wouldWerner report in its income statement for the year ended December31, 2016 (ignore taxes)?
total expenses:
4.What amounts related to the lease wouldWerner report in its statement of cash flows for the year endedDecember 31, 2016 (ignore taxes)?
| Capital Lease | ||
| Interest Portion | ||
| Principal Portion |
Related questions
| NutraLabs, Inc., leased a protein analyzer to Werner Chemical,Inc., on September 30, 2016. NutraLabs manufactured the machine ata cost of $5.4 million. The five-year lease agreement calls forWerner to make quarterly lease payments of $420,914, payable eachSeptember 30, December 31, March 31, June 30, with the firstpayment at September 30, 2016. NutraLabsâ implicit interest rate is12%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVADof $1) (Use appropriate factor(s) from the tablesprovided.) 1- Determine the price at which NutraLabs is "selling" theequipment (present value of the lease payments) at September 30,2016 Present value=__________ 2- What amounts related to the lease would NurtaLabs report inits balance sheet at December 21, 2016 (ignore taxes)? Net receivable=________ 3- What amounts related to the lease would NutraLabs report onits income statement for the year ended December 31, 2016 (ignoretaxes) Income effect=_________ |
