Question

On january 1, 2018, national insulation corporation (nic) leased equipment from united leasing under a finance lease. lease payments are made annually. title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by nic. portions of the united leasing's lease amortization schedule appear below: jan. 1 payments effective interest decrease in balance outstanding balance 2018 192,501 2018 20,000 20,000 172,501 2019 20,000 17,250 2,750 169,751 2020 20,000 16,975 3,025 166,726 2021 20,000 16,673 3,327 163,399 2022 20,000 16,340 3,660 159,739 2023 20,000 15,974 4,026 155,713 — — — — — — — — — — — — — — — 2035 20,000 7,364 12,636 61,006 2036 20,000 6,101 13,899 47,107 2037 20,000 4,711 15,289

Answer 1

The lease liability for National Insulation Corporation (NIC) is calculated using the lease amortization schedule provided by United Leasing. The liability decreases annually with the lease payments, effective interest, and the decrease in the outstanding balance, reflecting the lease's repayment over time.

Step-by-step explanation:

The provided lease amortization schedule outlines the annual lease payments made by NIC to United Leasing and the corresponding breakdown of these payments into effective interest and reductions in the outstanding lease liability. Each year, NIC pays $20,000, with a portion allocated to reduce the outstanding balance and another portion covering the interest expense.

The decreasing outstanding balance demonstrates the amortization of the lease liability, with the interest expense declining as the lease matures. The effective interest on the lease gradually decreases each year as the outstanding balance decreases, resulting in a lower interest component within the lease payments.

This schedule illustrates the gradual reduction of NIC's lease liability over time through annual payments, reflecting the repayment of the finance lease with United Leasing. By analyzing the annual payments, effective interest, and decreases in the outstanding balance, NIC can track the lease liability's amortization, understanding the lease's financial implications over its term.

Answer 2

Follows are the solution to this question:

Step-by-step explanation:

Please find the complete question in the attached file:

For the 1st question:

`\ \ (Lease \ term): 20\ years (Jan \ 1 \ 2018 \ - \ Jan \ 1 \ 2038)`

For the 2nd question:

Assets 72259, before the last payment, differs from the fixed amount of 26000, where it indicates the residual value.

For the 3rd question:

The existing annual rate of interest=
`- 12\% * ((23880)/(199001))`

For the 4th question:

`\to (520000+72259)= 592259`

For the 5th question:

`\to (20* 26000)= 520000`

For the 6th question:

`\to (225001-26000)= 199001`

For the 7th question:

`\to (592259-225001)= 367258`

For the 8th question:

`\to (26000* 8.36578)= 217510`