ADDITIONAL INDICATORS:
1. GAINS OR LOSSES IN THE FLUCTUATION IN THE MV OF THE ASSET = LESSEE
2. CUSTOMIZED
3. NON-CANCELABLE
4. SECONDARY RENT CONTRACT
PROBLEM 10-11
60 MONTHS
9 FREE
51 # OF MONTHS REQUIRING PAYMENTS
100,000 MONTHLY RENTAL
5,100,000.00 TOTAL RENTAL PAYMENTS OVER THE LEASE TERM
60 MONTHS
85,000.00 MONTHLY RENT EXPENSE
90,000.00
2017
Jan 1 Lease Liability 546,400.00
Interest Payable 253,600.00
Cash 800,000.00
PROBLEM 11-9
2016
1-Jan Leased Terminals and Freight Storage 3,790,000.00
Lease Liability 3,790,000.00
2017
31-Dec Real Property Taxes 75,000.00
Insurance Expense 125,000.00
Cash 200,000.00
Problem 11-10
PV of MLP: Periodic Rental Payments 1,000,000.00 6.33 6,328,000.00
BPO 200,000.00 0.32 64,400.00
6,392,400.00
2016
Jan 1 Leased Machine 6,392,400.00
Lease Liability 6,392,400.00
2017
Jan 1 Lease Liability 352,912.00
Interest Payable 647,088.00
Cash 1,000,000.00
PROBLEM 11-11
PV OF MLP: RENTAL PAYMENTS 1,000,000.00 7.61 7,606,000.00
2016
Jan 1 Leased Building 7,606,000.00
Leased Liability 7,606,000.00
Dec 31 Leased Liability 239,400.00
Interest Expense 760,600.00
Cash 1,000,000.00
PROBLEM 11-12:
PV OF MLP:
PERIODIC RENTAL PAYMENTS 1,000,000.00 3.27 3,274,300.00
GUARANTEED RESIDUAL VALUE 474,060.00 0.48 225,699.97
3,499,999.97
OR 3,500,000.00
THEREFORE: PV OF MLP IS 100% OF FMV OF THE LEASED ASSET
FINANCE LEASE
2016
Jan 1 Leased Equipment 3,500,000.00
Leased Liability 3,500,000.00
PROBLEM 11-13:
PV OF MLP:
PERIODIC RENTAL PAYMENTS 500,000.00 4.79 2,395,400.00
GUARANTEED RESIDUAL VALUE 400,000.00 0.56 225,800.00
2,621,200.00
pv/fv 94%
lt/eul 75%
2016
Jan 1 Leased Machinery 2,621,200.00
Leased Liability 2,121,200.00
Cash 500,000.00
2017
Jan 1 Interest Payable 212,120.00
Lease Liability 287,880.00
Cash 500,000.00
PROBLEM 11-14
PV OF MLP:
PERIODIC RENTAL PAYMENTS 400,000.00 3.62 1,449,720.00
GUARANTEED RESIDUAL VALUE 200,000.00 0.76 152,580.00
1,602,300.00
PV/FV 94% FINANCE LEASE
2016
Dec 31 Leased Equipment 1,602,300.00
Prepaid Insurance 20,000.00
Cash 420,000.00
Lease Liability 1,202,300.00
2017
Dec 31 Insurance Expense 20,000.00
Prepaid Insurance 20,000.00
PROBLEM 11-15
PV OF MLP RENTAL PAYMENTS 600,000.00 3.60 2,160,000.00
PV/FV 98%
A FINANCE LEASE
2016
Jan 1 Leased Equipment 2,160,000.00
Leased Liability 2,160,000.00
2020
31-Dec Accumulated Depreciation - LE 2,160,000.00
Leased Equipment 2,160,000.00
ver is shorter
SOR'S BOOKS:
T RECEIVABLE 877,500.00
RENT INCOME 877,500.00
3,600,000.00
ENT INCOME 3,510,000.00
ENT RECEIVABLE 90,000.00
2700000
ENT INCOME 2,632,500.00
RENT RECEIVABLE 67,500.00
PROBLEM 11-8
DATE PAYMENT INTEREST PRINCIPAL PV
1/1/2016 3,336,000.00
1/1/2016 800,000.00 800,000.00 2,536,000.00 total lease liability
1/1/2017 800,000.00 253,600.00 546,400.00 1,989,600.00
1/1/2018 800,000.00 198,960.00 601,040.00 1,388,560.00
1/1/2019 800,000.00 138,856.00 661,144.00 727,416.00 Current Liability
1/1/2020 800,000.00 72,584.00 727,416.00 -
2,536,000.00 1,989,600.00
Non-current Liability
PROBLEM 11-12
DATE PAYMENT INTEREST PRINCIPAL PV
1/1/2016 3,500,000.00
12/31/2016 1,000,000.00 560,000.00 440,000.00 3,060,000.00
12/31/2017 1,000,000.00 489,600.00 510,400.00 2,549,600.00
12/31/2018 1,000,000.00 407,936.00 592,064.00 1,957,536.00
12/31/2019 1,000,000.00 313,205.76 686,794.24 1,270,741.76
12/31/2020 1,000,000.00 203,318.68 796,681.32 474,060.44
PROBLEM 11-13
DATE PAYMENT INTEREST PRINCIPAL PV
1/1/2016 2,621,200.00
1/1/2016 500,000.00 - 500,000.00 2,121,200.00
1/1/2017 500,000.00 212,120.00 287,880.00 1,833,320.00
1/1/2018 500,000.00 183,332.00 316,668.00 1,516,652.00
1/1/2019 500,000.00 151,665.20 348,334.80 1,168,317.20
1/1/2020 500,000.00 116,831.72 383,168.28 785,148.92
1/1/2021 500,000.00 78,514.89 421,485.11 363,663.81
1/1/2022 400,000.00 36,336.19 363,663.81 -
Problem 11-14
DATE PAYMENT INTEREST PRINCIPAL PV
12/31/2016 1,602,300.00
12/31/2016 400,000.00 - 400,000.00 1,202,300.00
12/31/2017 400,000.00 84,161.00 315,839.00 886,461.00
12/31/2018 400,000.00 62,052.27 337,947.73 548,513.27
12/31/2019 400,000.00 38,395.93 361,604.07 186,909.20
12/31/2020 200,000.00 13,090.80 186,909.20 -