Textbook Notes (363,123)
Canada (158,212)
RSM221H1 (19)
Chapter

# ch 14

20 Pages
128 Views

School
University of Toronto St. George
Department
Rotman Commerce
Course
RSM221H1
Professor
Scott Douglass
Semester
Fall

Description
EXERCISE 20-15 (25-35 minutes) (a) Part 1. Annuity Due: Fair market value of leased asset to lessor \$415,000.00 Less: Present value of unguaranteed residual value \$25,000 X .68058 (present value of 1 at 8% for 5 periods) 17,014.50 Amount to be recovered through lease payments \$397,985.50 Five periodic lease payments \$397,985.50 4.31213* \$92,294.41 *Present value of annuity due of 1 for 5 periods at 8%. Excel formula =PMT(rate,nper,pv,fv,type) Using a financial calculator: PV \$ (415,000) I 8% N 5 PMT \$ ? Yields \$92,294 FV \$ 25,000 Type 1 EXERCISE 20-15 (Continued) (a) Part 2. Ordinary Annuity: Fair market value of leased asset to lessor \$415,000.00 Less: Present value of unguaranteed residual value \$25,000 X .68058 (present value of 1 at 8% for 5 periods) 17,014.50 Amount to be recovered through lease payments \$397,985.50 Five periodic lease payments \$397,985.50 3.99271* \$99,678.04 *Present value of annuity due of 1 for 5 periods at 8%. Excel formula =PMT(rate,nper,pv,fv,type) Excel formula =PMT(rate,nper,pv,fv,type) Using a financial calculator: PV \$ (415,000) I 8% N 5 PMT \$ ? Yields \$99,678 FV \$ 25,000 Type 0 EXERCISE 20-15 (Continued) (b) 1 Vick Leasing Inc., (Lessor) Lease Amortization Schedule Annual Lease Interest Net Balance Payment (8%) on Net Investment of Net Date Plus URV Investment Recovery Investment Jan. 1, 2011 \$415,000.00 Jan. 1, 2011 \$92,294.00 \$92,294.00 322,706.00 Jan. 1, 2012 92,294.00 \$25,816.48 66,477.52 256,228.48 Jan. 1, 2013 92,294.00 20,498.28 71,795.72 184,432.76 Jan. 1, 2014 92,294.00 14,754.62 77,539.38 106,893.38 Jan. 1, 2015 92,294.00 8,551.47 83,742.53 23,150.85 Jan. 1, 2016 25,000.00 1,849.15 23,150.85 0 \$486,470.00 \$71,470.00 \$415,000.00 (b) 2 Vick Leasing Inc., (Lessor) Lease Amortization Schedule Annual Lease Interest Net Balance Payment (8%) on Net Investment of Net Date Plus URV Investment Recovery Investment Jan. 1, 2011 \$415,000.00 Dec. 31, 2011 \$99,678.00 \$33,200.00 \$66,478.00 348,522.00 Dec. 31, 2012 99,678.00 27,881.76 71,796.24 276,725.76 Dec. 31, 2013 99,678.00 22,138.06 77,539.94 199,185.82 Dec. 31, 2014 99,678.00 15,934.87 83,743.13 115,442.69 Dec. 31, 2015 99,678.00 9,235.31 90,442.69 25,000.00 Dec. 31, 2015 25,000.00 - 25,000.00 0.00 \$523,390.00 \$108,390.00 \$415,000.00 EXERCISE 20-15 (Continued) (c) 1/1/11 Equipment Purchased for Lease. .415.000.00 Cash.......................................415,000.00 Lease Payments Receivable...................................486,470.00 Unearned Interest IncomeLeases................ 71,470.00 Equipment Purchased for Lease 415,000.00 1/1/11 Cash................................................96,294.00 Maintenance Expense.......... 4,000.00 Lease Payments Receivable.......................... 92,294.00 during Maintenance Expense.................... 6,000.00 2011 Cash....................................... 6,000.00 12/31/11 Unearned Interest Income Leases...................................... 25,816.48 Interest Income Leases............................. 25,816.48 1/1/12 Cash................................................96,294.00 Maintenance Expense.......... 4,000.00 Lease Payments Receivable.......................... 92,294.00 during Maintenance Expense.................... 6,000.00 2012 Cash....................................... 6,000.00 12/31/12 Unearned Interest Income Leases...................................... 20,498.28 Interest Income Leases............................. 20,498.28
More Less

Related notes for RSM221H1

Log In

OR

Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view

OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.

Request Course
Submit