rm of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. 2. The fair value of the asset at January 1, 2020, is $56,000. 3. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $3,000, none of which is guaranteed. 4. The agreement requires equal annual rental payments of $18,479 to the lessor, beginning on January 1, 2020.
rm of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. 2. The fair value of the asset at January 1, 2020, is $56,000. 3. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $3,000, none of which is guaranteed. 4. The agreement requires equal annual rental payments of $18,479 to the lessor, beginning on January 1, 2020.
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 2E: Lessee Accounting with Payments Made at Beginning of Year Adden Company signs a lease agreement...
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Question
Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Skysong Company. The following information relates to this agreement.
Click here to view factor tables.
(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
| 1. | The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. | |
| 2. | The fair value of the asset at January 1, 2020, is $56,000. | |
| 3. | The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $3,000, none of which is guaranteed. | |
| 4. | The agreement requires equal annual rental payments of $18,479 to the lessor, beginning on January 1, 2020. | |
| 5. | The lessee’s incremental borrowing rate is 5%. The lessor’s implicit rate is 4% and is unknown to the lessee. | |
| 6. | Skysong uses the |
Click here to view factor tables.
(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
(a)
Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round answers to 0 decimal places, e.g. 5,265.)
|
SKYSONG COMPANY (Lessee)
Lease Amortization Schedule |
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|---|---|---|---|---|---|---|---|---|
|
Date
|
Annual Lease
Payment |
Interest on
Liability |
Reduction of Lease
Liability |
Lease Liability
|
||||
|
1/1/20
|
$enter a dollar amount
|
$enter a dollar amount
|
$enter a dollar amount
|
$enter a dollar amount
|
||||
|
1/1/20
|
enter a dollar amount
|
enter a dollar amount
|
enter a dollar amount
|
enter a dollar amount
|
||||
|
1/1/21
|
enter a dollar amount
|
enter a dollar amount
|
enter a dollar amount
|
enter a dollar amount
|
||||
|
1/1/22
|
enter a dollar amount
|
enter a dollar amount
|
enter a dollar amount
|
enter a dollar amount
|
||||
|
|
$enter a total amount for this column
|
$enter a total amount for this column
|
$enter a total amount for this column
|
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