At January Caf Med leased restaurant equipment from Crescent Corporation under a nineyear lease agreement.
The lease agreement specifies annual payments of $ beginning January the beginning of the lease, and on each December thereafter through
The equipment was acquired recently by Crescent at a cost of $its fair value and was expected to have a useful life of years with no salvage value at the end of its life. Crescent records depreciation using the straightline method.
Because the lease term is only nine years, the asset does have an expected residual value at the end of the lease term of $
Crescent seeks a return on its lease investments.
By this arrangement, the lease is deemed to be an operating lease.
Note: Use tables, Excel, or a financial calculator. FV of $ PV of $ FVA of $ PVA of $ FVAD of $ and PVAD of $
Required:
What will be the effects of the lease on Crescents lessors earnings for the first year ignore taxes
Note: Enter decreases with negative sign.
What will be the balances in the balance sheet accounts related to the lease at the end of the first year for Crescent ignore taxes
