NutraLabs, Inc., leased a protein analyzer to Werner Chemical, Inc., on Septembe
ID: 2417498 • Letter: N
Question
NutraLabs, Inc., leased a protein analyzer to Werner Chemical, Inc., on September 30, 2016. NutraLabs manufactured the machine at a cost of $5.4 million. The five-year lease agreement calls for Werner to make quarterly lease payments of $420,914, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2016. NutraLabs’ implicit interest rate is 12%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
1- Determine the price at which NutraLabs is "selling" the equipment (present value of the lease payments) at September 30, 2016
Present value=__________
2- What amounts related to the lease would NurtaLabs report in its balance sheet at December 21, 2016 (ignore taxes)?
Net receivable=________
3- What amounts related to the lease would NutraLabs report on its income statement for the year ended December 31, 2016 (ignore taxes)
Income effect=_________
NutraLabs, Inc., leased a protein analyzer to Werner Chemical, Inc., on September 30, 2016. NutraLabs manufactured the machine at a cost of $5.4 million. The five-year lease agreement calls for Werner to make quarterly lease payments of $420,914, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2016. NutraLabs’ implicit interest rate is 12%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
1- Determine the price at which NutraLabs is "selling" the equipment (present value of the lease payments) at September 30, 2016
Present value=__________
2- What amounts related to the lease would NurtaLabs report in its balance sheet at December 21, 2016 (ignore taxes)?
Net receivable=________
3- What amounts related to the lease would NutraLabs report on its income statement for the year ended December 31, 2016 (ignore taxes)
Income effect=_________
Explanation / Answer
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Lease per year Totatl value of lease for 5 Year 420,914 420,914 420,914 420,914 1,683,656 8418280 Machine cost 5400000 Total 3018280 Intrest 3240000 Lose on sale of machine -221720 Interest calculation Machine cost Interest Total interest 5400000 648000 3240000 1 Present value= 8418280 2 Net receivable= 5400000 3 Income effect= -221720
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.