CHAPTER 15, 12 Manufacturers Southern leased high-tech electronic equipment from

Question

CHAPTER 15, 12

Manufacturers Southern leased high-tech electronic equipment from International Machines on January 1, 2018. International Machines manufactured the equipment at a cost of $96,000. Manufacturers Southern's fiscal year ends December 31. (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.) Related Information: Lease term Quarterly rental payments Economic life of asset Fair value of asset Implicit interest rate 2 years (8 quarterly periods) $16,500 at the beginning of each period 2 years $125,370 68 Required: 1. Show how International Machines determined the $16,500 quarterly lease payments 2. Prepare appropriate entries for International Machines to record the lease at its beginning, January 1, 2018, and the second lease payment on April 1, 2018 Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below Required 1Required 2 Show how International Machines determined the $16,500 quarterly lease payments. (Round your intermediate and final answers to nearest whole dollar.) PV factors based on Table or Calculator function PV of Lease PVAD of $1 108,870 1.3% Lease Payment 108,870

Explanation / Answer

Table or calculator function PVAD of $ 1 PV of lease 125370 n 8 i 1.5%            [6/4] Lease payment 16500

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