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Fieval Leasing Company Signs An Agreement On January 1 2010 PDF

Fieval Leasing Company signed a 6-year non-cancelable lease agreement on January 1, 2010 to lease equipment worth $343,000 to Reid Company. The equipment is expected to have a residual value of $61,071 at the end of the lease term. Reid Company is responsible for all executory costs. The agreement requires equal annual rental payments beginning on January 1, 2010.

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54 views1 page

Fieval Leasing Company Signs An Agreement On January 1 2010 PDF

Fieval Leasing Company signed a 6-year non-cancelable lease agreement on January 1, 2010 to lease equipment worth $343,000 to Reid Company. The equipment is expected to have a residual value of $61,071 at the end of the lease term. Reid Company is responsible for all executory costs. The agreement requires equal annual rental payments beginning on January 1, 2010.

Uploaded by

Anbu jaromia
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Fieval Leasing Company signs an agreement on January 1

2010
Fieval Leasing Company signs an agreement on January 1, 2010, to lease equipment to Reid
Company. The following information relates to this agreement.1. The term of the non-cancelable
lease is 6 years with no renewal option. The equipment has an estimated economic life of 6
years.2. The cost of the asset to the lessor is $343,000. The fair value of the asset at January 1,
2010, is $343,000.3. The asset will revert to the lessor at the end of the lease term at which
time the asset is expected to have a residual value of $61,071, none of which is guaranteed.4.
Reid Company assumes direct responsibility for all executory costs.5. The agreement requires
equal annual rental payments, beginning on January 1, 2010.6. Collectibility of the lease
payments is reasonably predictable. There are no important uncertainties surrounding the
amount of costs yet to be incurred by the lessor.(Round all numbers to the nearest cent.)(a)
Assuming the lessor desires a 10% rate of return on its investment, calculate the amount of the
annual rental payment required. Round to the nearest dollar.(b) Prepare an amortization
schedule that would be suitable for the lessor for the lease term.(c) Prepare all of the journal
entries for the lessor for 2010 and 2011 to record the lease agreement, the receipt of lease
payments, and the recognition of income. Assume the lessor’s annual accounting period ends
on December 31.View Solution:
Fieval Leasing Company signs an agreement on January 1 2010
SOLUTION-- http://accountinginn.online/downloads/fieval-leasing-company-signs-an-agreement-
on-january-1-2010/

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