On 1 January 2016, Atom Ltd leased a new equipment from Success Ltd for three years. Annual payments of $28,000 are payable in arrears, the first installment being due on 31 December 2016. The equipment costs $76,300 and the estimated economic useful life of the asset is four years with nil residual value. The interest rate implicit in the lease is 6%. Required: Complete the following amortisation schedule to determine the interest expenses and lease liability. Round all answers to the nearest dollar. Do not enter $ sign. Year ending Lease Payable Beg. Bal Interest Expense Lease payment Reduction in Lease liability Lease Payable End. Bal $ $ $ $ $ 31 Dec 2016 Blank 1 Blank 2 Blank 3 Blank 4 Blank 5 31 Dec 2017 Blank 6 Blank 7 Blank 8 Blank 9 Blank 10 31 Dec 2018 Blank 11 Blank 12 Blank 13 Blank 14 Blank 15
On 1 January 2016, Atom Ltd leased a new equipment from Success Ltd for three years. Annual payments of $28,000 are payable in arrears, the first installment being due on 31 December 2016. The equipment costs $76,300 and the estimated economic useful life of the asset is four years with nil residual value. The interest rate implicit in the lease is 6%. Required: Complete the following amortisation schedule to determine the interest expenses and lease liability. Round all answers to the nearest dollar. Do not enter $ sign. Year ending Lease Payable Beg. Bal Interest Expense Lease payment Reduction in Lease liability Lease Payable End. Bal $ $ $ $ $ 31 Dec 2016 Blank 1 Blank 2 Blank 3 Blank 4 Blank 5 31 Dec 2017 Blank 6 Blank 7 Blank 8 Blank 9 Blank 10 31 Dec 2018 Blank 11 Blank 12 Blank 13 Blank 14 Blank 15
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 10MC: On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring...
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On 1 January 2016, Atom Ltd leased a new equipment from Success Ltd for three years. Annual payments of $28,000 are payable in arrears, the first installment being due on 31 December 2016.
The equipment costs $76,300 and the estimated economic useful life of the asset is four years with nil residual value. The interest rate implicit in the lease is 6%.
Required:
Complete the following amortisation schedule to determine the interest expenses and lease liability. Round all answers to the nearest dollar. Do not enter $ sign.
| Year ending | Lease Payable Beg. Bal |
Interest Expense | Lease payment | Reduction in Lease liability | Lease Payable End. Bal |
| $ | $ | $ | $ | $ | |
| 31 Dec 2016 | Blank 1 | Blank 2 | Blank 3 | Blank 4 | Blank 5 |
| 31 Dec 2017 | Blank 6 | Blank 7 | Blank 8 | Blank 9 | Blank 10 |
| 31 Dec 2018 | Blank 11 | Blank 12 | Blank 13 | Blank 14 | Blank 15 |
Expert Solution
Step 1
To determine the interest and lease liability first we have to find the present value of lease payment using the interest rate implicit in the lease. Summary of all the blank answers:
Step 2
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