Werner Chemical, Inc., leased a protein analyzer on September30, 2016. The five-year lease agreement calls for Werner to makequarterly lease payments of $375,234, 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) (Useappropriate factor(s) from the tables provided.)
1- Determine the present value of the lease payments atSeptember 30, 2016
Present value=__________
2- What amounts related to the lease would Werner report in itsbalance sheet at 12/31/16 (ignore taxes)?
Liability=_________
Assets=_________
3- What amounts related to the lease would Werner report in itsincome statemnt for the year ended 12/31/16 (ignore taxes)?
Total expenses=_________
4- What amounts related to the lease would Werner report in itsstatment of cash flows for the year ended 12/31/16 (ignoretaxes)?
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 $375,234, 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) (Useappropriate factor(s) from the tables provided.)
1- Determine the present value of the lease payments atSeptember 30, 2016
Present value=__________
2- What amounts related to the lease would Werner report in itsbalance sheet at 12/31/16 (ignore taxes)?
Liability=_________
Assets=_________
3- What amounts related to the lease would Werner report in itsincome statemnt for the year ended 12/31/16 (ignore taxes)?
Total expenses=_________
4- What amounts related to the lease would Werner report in itsstatment of cash flows for the year ended 12/31/16 (ignoretaxes)?
Capital lease=_________
Interest portion=________
Principal portion=_______
Related questions
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 |
| 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=_________ |
