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    Problem 3 Lessor

    Uploaded by

    Gelo Owss
    NUPTIAL OF MARRIAGE Financing Co. leased equipment worth 600,000 to WEDDING, Inc. for 4 years at an annual rental of 220,000. The lease included a non-lease component of 18,098 for services. NUPTIAL incurred 40,000 in negotiation costs. The implicit interest rate after adjustments is 10%. The net investment on 1/1/20X1 was 640,002 with unearned interest income of 167,606. The amortization table shows the collections, interest, amortization, and present value over the lease term.

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    Problem 3 Lessor

    Uploaded by

    Gelo Owss
    2K views7 pages
    NUPTIAL OF MARRIAGE Financing Co. leased equipment worth 600,000 to WEDDING, Inc. for 4 years at an annual rental of 220,000. The lease included a non-lease component of 18,098 for services. NUPTIAL incurred 40,000 in negotiation costs. The implicit interest rate after adjustments is 10%. The net investment on 1/1/20X1 was 640,002 with unearned interest income of 167,606. The amortization table shows the collections, interest, amortization, and present value over the lease term.

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    Problem 3 lessor.pptx

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    NUPTIAL OF MARRIAGE Financing Co. leased equipment worth 600,000 to WEDDING, Inc. for 4 years at an annual rental of 220,000. The lease included a non-lease component of 18,098 for services. NUPTIAL incurred 40,000 in negotiation costs. The implicit interest rate after adjustments is 10%. The net investment on 1/1/20X1 was 640,002 with unearned interest income of 167,606. The amortization table shows the collections, interest, amortization, and present value over the lease term.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    2K views7 pages

    Problem 3 Lessor

    Uploaded by

    Gelo Owss
    NUPTIAL OF MARRIAGE Financing Co. leased equipment worth 600,000 to WEDDING, Inc. for 4 years at an annual rental of 220,000. The lease included a non-lease component of 18,098 for services. NUPTIAL incurred 40,000 in negotiation costs. The implicit interest rate after adjustments is 10%. The net investment on 1/1/20X1 was 640,002 with unearned interest income of 167,606. The amortization table shows the collections, interest, amortization, and present value over the lease term.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 7

    PROBLEM 3

    Mayfour A. Marzo
    On January 1 20x1, NUPTIAL OF MARRIAGE Financing Co.
    leased equipment to WEDDING, Inc. Information on the lease
    is shown below.

    Cost of equipment 600,000


    Useful life of equipment 5 years
    Lease term 4 years
    Annual rental payable at the end of 220,000
    each year
    ADDITIONAL INFORMATION:

    The annual lease payment includes 18,098 pertaining


    to non-lease component. This amount reflects the
    stand alone selling price of the service. Direct cost
    incurred by NUPTIAL in negotiating the lease
    amounted to 40,000. The implicit interest rate after
    adjustment of for the forgoing items is 10%.
    GROSS INVESTMENT IN THE LEASE
    ON JANUARY 1, 20X1
    Fixed lease payments P 220,000
    Less: non-lease component 18,098
    201,902
    Multiply by: lease term 4
    Gross investment in the lease P 807,608
    NET INVESTMENT(1/1/20X1)
    Annual lease payments P201,902
    Multiply by: PV ordinary annuity @10% 3.16986
    Net investment in the lease P640,002
    UNEARNED INTEREST INCOME
    (1/1/20X1)
    Gross investment P807,608
    Less: net investment 640,002
    Unearned interest income P167,606
    AMORTIZATION TABLE
    date collections interest amortization present value

    1/1/20x1 640,002

    12/31/20x1 201,902 64,000 137,902 502,100

    12/31/20x2 201,902 50,210 151,692 350,408

    12/31/20x3 201,902 35,041 166,861 183,547

    12/31/20x4 201,902 18,355 183,547 (0)

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