Required Solution of the Lease Scenario?

• Asset cost = 100,000
• Contract terms = 48 months
• Annual interest rate = 9%
• Re-payment frequency = Quarterly in Arrear
• RV = 10,000
• Down payment = 8,000
• Security deposit = 50,000
• Start day of the contract = 15th February, 2018
• Asset useful life = 60 months
• Rental numbers 9 to 16 should be double in amount as compared to rental numbers 1 to 8 (e.g. if rental numbers 1 to 8 are 5,000 each then rental numbers 9 to 16 should be 10,000 each)

Requirements:

2. Calculate periodic lease rentals.
3. Based on point 2 above, prepare amortization schedules for AFC
4. Calculate the AFC’s achieved rate of return.
5. Prepare all accounting entries for AFC starting from contract signing till restructuring. Accounting entry must be with reference to a date.
6. The AFC customer has defaulted after paying 2nd rental and now 5th rental is due. The customer has requested and AFC agreed to restructure the lease facility by increasing interest rate 1 % p.a. and recovering the interest overdue and penalty amount upfront. The company charges 20% p.a. a penalty for overdue on an actual days basis. Please work out the restructured rental amount, New Amortization schedule and the accounting treatment at restructuring this contract. Please keep the Zero rental or fix amount rental same as mentioned in the original scenario.