On January 1, 2021, Jasperse Corporation leased equipment under a finance lease designed to earn the lessor a 10% rate of return for providing long-term financing. The lease agreement specified ten annual payments of $90,000 beginning January 1, and each December 31 thereafter through 2029. A 10-year service agreement was scheduled to provide maintenance of the equipment as required for a fee of $8,000 per year. Insurance premiums of $7,000 annually are related to the equipment. Both amounts were to be paid by the lessor and lease payments reflect both expenditures. Required:
At what amount will Jasperse record a right-of-use asset?

$554,320

Explanation:

Annual payment = $90,000

Rate = 10%

Time period = 10 years

Maintenance of equipment = $8,000

PVAD of $1(n = 10, i=11) = 6.76

Lease payment = $90,000 - $8,000 = $82,000

Amount of Right-of-use asset = Lease payment * PVAD of $1

Amount of Right-of-use asset = $82,000 * 6.76

Amount of Right-of-use asset = $554,320

So, Jasperse will record $554,320 as a right-of-use asset amount.

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

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