Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. on january 1, 2018, capital corp. leased equipment

On January 1, 2018, Capital Corp. leased equipment to Hinton Corporation. The following information pertains...

70.2K

Verified Solution

Question

Accounting

On January 1, 2018, Capital Corp. leased equipment to Hinton Corporation. The following information pertains to this lease.

  1. The term of the non cancelable lease is 12 years, with no renewal option. The equipment reverts to the lessor at the termination of the lease.
  2. Equal rental payments are due on January 1 of each year, beginning in 2018.
  3. The fair value of the equipment on January 1, 2018, is $247,500, and its cost is $198,000.
  4. The equipment has an economic life of 16 years. Hinton depreciates all of its equipment on a straight-line basis.
  5. Capital set the annual rental to ensure a 6% rate of return. Hinton's incremental borrowing rate is 4%, and the implicit rate of the lessor is unknown.

Collectability of lease payments is reasonably predictable, and no important uncertainties surround the amount of costs yet to be incurred by the lessor.

Q) Calculate the amount of the annual rental payment.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Biology
1.2K views

UNIT 1 EXAMPLE You hear I m Gia I study life science You write I...

Physics
1.2K views

2 19 The space between the plates of a parallel plate air Vcapacitor is filled...

Physics
1.2K views

Three particles of masses 0 5 kg 1 0 kg and 1 5 kg are...

Geometry
1.2K views

An experiment consists of rolling two fair number cubes The diagram shows the sample space...

Calculus
1.2K views

Il in the blank with an the corresponding sides of two similar figures are the...

Calculus
1.2K views

Consider a triangle ABC like the one below Suppose that B 58 C 67 and...

Algebra
1.2K views

Find the slope of the line passing through the points 4 9 and 8 9...

Accounting
1.2K views

Describe what how cafeteria plans work. What is the advantage of them for the employee...

Accounting
1.2K views

TockTick Company wants to know its break-even point. It has total fixed costs of $200,000...

Accounting
1.2K views

A LLC, is owned by three members. James (individual) owns 20%, Maria (individual) owns 20%,...

Accounting
1.2K views

The entry to record a sale of $700 with terms of 2/10, n/30 will include...

Accounting
1.2K views

Sales incentives are one of the most popular incentives in the workplace. Commissions are one...