NAMA : Adelia Marhamah

NIM : 0502203058
KELAS : AKM 2-4/C

a) The lease is a sales-type lease because : (1) the lease term exceeds 75% of the assets
estimated economic life, and(2) Moonstruck Company realized an element of profit aside
from the financing chager.
1. Present value of an annuity due of $1 for 10 periods discounted at 10%
Annual lease payment
Present value of the 10 rental payment
Add present value of estimated residual value of $20.000 in 10 years at
10% ($20.000 X .38554)
Lease receivable at inception

2. Sales price is $270.361 (the present value of the 10 annual lease payment) or the intial
PV of $278.072 minus the PV of the unguaranted residual value of $7,711.

3. Cost of sales is $172.289 (the $180.000 cost of the asset less the present value the
unguaranteed residual value).

b) MOONSTRUCK COMPANY (Lessor)

Lease Amortization Schedule
Annuity Due Basis, Unguaranteed Residual Value
Annual Lease Interest (10%) Lease
Beginning Payment Plus on Lease Receivable
of Year Residual Value Receivable Recovery
(a) (b) (c.)
Intial PV - - -
1 $ 40,000 - $ 40,000
2 $ 40,000 $ 23,807 $ 16,193
3 $ 40,000 $ 22,188 $ 17,812
4 $ 40,000 $ 20,407 $ 19,593
5 $ 40,000 $ 18,447 $ 21,553
6 $ 40,000 $ 16,292 $ 23,708
7 $ 40,000 $ 13,921 $ 26,079
8 $ 40,000 $ 11,313 $ 28,687
9 $ 40,000 $ 8,445 $ 31,555
10 $ 40,000 $ 5,289 $ 34,711
End of 10 $ 20,000 $ 1,819 $ 18,181
$ 420,000 $ 141,928 $ 278,072

* Rounding error is $1.00

a) Annual lease payment required by lease contract.
b) Preceding balance of d X 10% except beginning of first year of lease term
c) (a) minus (b)
d) Preceding balance minus (c.)

c) Beginning of the Year

Lease Receivable $ 278,072
Cost of Goods Sold $ 172,289
Sales
Computer Invetory
(To record the sale and the cost of goods sold in the
 lease transaction)

Selling Expense $ 4,000

Cash
(To record payment of the intial direct cost relating to
the lease)

Cash $ 40,000
Lease Receivable
(To record receipt of the first lease payment)

End of the Year

Interest Receivable $ 23,807
Interest Revenue
(To record interest earned during the first year of the
lease)
eeds 75% of the assets
n element of profit aside

$ 6.75902
X$ 40.000
$ 270,361

$ 7.711
$ 278,072

ease payment) or the intial

alue of $7,711.

s the present value the

or)

ual Value

Lease
Receivable
(d)
$ 278,072
$ 238,072
$ 221,879
$ 204,067
$ 184,474
$ 162,921
$ 139,213
$ 113,134
$ 84,447
$ 51,892
$ 18,181
0

of lease term

$ 270,361
$ 180,000
$ 4,000

$ 40,000

$ 23,807
a) The lease is a finance lease because : (1)the lease term exceeds 75% of the
asset's economic life and (2) the present value of the minimum lease payment
exceeds 90% of the fair value of the leased asset.
Intial Liability Under Finance Leases :
Minimum lease payment ($40.000) X PV of an
annuity due for 10 periods at 10%(6.75902) $ 270,361

b) NATIONAL AIRLINES (Lessee)

Lease Amortization Schedule
Annuity Due Basis and URV
Annual Lease Interest (10%) Lease
Beginning Payment Plus on Lease Receivable Lease
of Year Residual Value Receivable Recovery Receivable
(a) (b) (c.) (d)
Intial PV - - - $ 270,361
1 $ 40,000 - $ 40,000 $ 230,361
2 $ 40,000 $ 23,036 $ 16,964 $ 213,397
3 $ 40,000 $ 21,340 $ 18,660 $ 194,737
4 $ 40,000 $ 19,474 $ 20,526 $ 174,211
5 $ 40,000 $ 17,421 $ 22,579 $ 151,632
6 $ 40,000 $ 15,163 $ 24,837 $ 126,795
7 $ 40,000 $ 12,680 $ 27,320 $ 99,475
8 $ 40,000 $ 9,948 $ 30,052 $ 69,423
9 $ 40,000 $ 6,942 $ 33,058 $ 36,365
10 $ 40,000 $ 3,635 $ 36,365 0
$ 400,000 $ 129,639 $ 270,361

* Rounding error is $1
a) Annual lease payment required by lease contract.
b) Preceding balance of d X 10% except beginning of first year of lease term
c) (a) minus (b)
d) Preceding balance minus (c.)

c) Beginning of the Year

Leased Equipment Under Finance Leases $ 270,361
Lease Liability $ 270,361
(To record the lease of computer equipment
using finance lease menthod)

Lease Liability $ 40,000

Cash $ 40,000
(To record the first rental payment)

End of the Year

Interest Expense $ 23,036
Interest Payable $ 23,036
(To record accrual of annual interest on lease
liability)
Depreciation Expense $ 27,036
Accumulated Depreciation - Leased
Equipment $ 27,036
(To record depreciation expense for first year
[$270.361 ÷ 10] )
a) GRISHELL SHIPPING COMPANY
Schedule to Compute the Discounted Present Value
Of Terminal Facilities and the Related Obligation
January 1, 2010
Present value of first 10 payments :
Immediate payment £ 800,000
Present value of an ordinary annuity for 9 years at
6% (£800.000 X 6.801692) £ 5,441,354
Present value of last 10 payments :
First payment of £320.000 £ 320,000
Present value of an ordinary annuity for 9 years at
6% (£320.000 X 6.801692) £ 2,176,541
Present value of last 10 payments at
January 1,2020 £ 2,496,541
Discount to January 1, 2010 (£2.496.541 X .558395)
Discounted present value of terminal facilities and
related obligation

(Note to instructor : The student can compute the £6.241.354 by using the present value of an
annuity due for 10 periods at 6% (7.80169 X £800.000 = £6.241.352 : £2 rounding difference). For
the last ten periods, the present value of an annuity due for 20 periods less the present value of an
anuity due for 10 periods can be used as follows : ([12.15812 - 7.80169] X £320.000 = £1.394.058
: £2 difference due to rounnding).

b) January 1, 2012

Interest Payable £ 384,480

Lease Liability £ 415,520
Property Taxes Expense £ 125,000
Property Insurance Expense £ 23,000
Cash

Partial Amortization Schedule

(Annuity Due Basis)
Lease Executory Interest (6%) on Reduction of
Date
Payment Costs Lease Liability Lease Liability
1/1/10. - - - -
1/1/10. £ 948,000 £ 148,000 £ - £ 800,000
1/1/11. £ 948,000 £ 148,000 £ 480,000 £ 392,000
1/1/12. £ 948,000 £ 148,000 £ 384,480 £ 415,520
1/1/13. £ 948,000 £ 148,000 £ 359,549 £ 440,451

December 31, 2012

Depreciation Expense - Finance Leases £ 190,000

Accumulated Depreciation - Leased Assets
(To record annual depreciation expense on leased assed)
 (£7.600.000 ÷ 40)

Note : The leased asset is depreciated over its economic life because a bargain purchase is
available at the end of the lease term.

December 31, 2012

Interest Expense £ 359,549

Interest Payable
(To record interest accrual at 6% on outstanding debt of
£5.992.480)
alue
on

£ 6,241,354

£ 1,394,056

£ 7,635,410

e present value of an
rounding difference). For
ss the present value of an
X £320.000 = £1.394.058

£ 948,000

Lease
Liability
£ 7,600,000
£ 6,800,000
£ 6,408,000
£ 5,992,480
£ 5,552,029

£ 190,000
bargain purchase is

£ 359,549