Solved

Use the Following Information for Questions 10-11

question 40

Multiple Choice

Use the following information for questions 10-11.
On January 1, 2020, Jeckyll Ltd. signs a 8-year non-cancellable lease agreement to lease a storage building from Hyde Inc. Hyde is in the business of leasing/selling property. Collectibility of the lease payments is reasonably assured and no additional costs are to be incurred by the lessor (other than executory costs) . Both the lessor and the lessee are private corporations adhering to ASPE. The following information is available regarding this lease agreement:
1. The agreement requires equal payments at the end of each year.
2. At January 1, 2020, the fair value of the building is $ 1,350,000 and Hyde's book value is $ 1,125,000.
3. The building has an estimated economic life of 8 years, with no residual value. Jeckyll uses straight-line depreciation for all its depreciable assets.
4. At the termination of the lease, title to the building will transfer to the lessee.
5. Jeckyll's incremental borrowing rate is 10%. Hyde Inc. set the annual rental to ensure a 9% rate of return. The lessor's implicit rate is known to Jeckyll.
6. The yearly lease payment includes $ 4,500 executory costs related to taxes on the property.
-Rounded to the nearest dollar, the amount of the minimum annual lease payment is

Definitions:

Rhymes

Literary devices featuring the repetition of similar or identical sounds in the final syllables of words, commonly used in poetry and songs.

Letters

Characters that constitute the written form of a language, used to represent sounds or words.

Chunk

A unit of information or memory, often used in cognitive psychology to describe how pieces of information are grouped together for easier processing and recall.

Engagement

The degree of attention, curiosity, interest, optimism, and passion that people show when they are learning or being taught, which extends to the level of motivation they have to learn and progress in their education.