Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN: 9781305654174
Author: Gary A. Porter, Curtis L. Norton
Publisher: Cengage Learning
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Chapter 10, Problem 10.9E
Leased Assets
Koffman and Sons signed a four-year lease for a forklift on January 1, 2016. Annual lease payments of $1,510, based on an interest rate of 8%, are to be made every December 31, beginning with December 31, 2016.
Required
- Assume that the lease is treated as an operating lease.
- Will the value of the forklift appear on Koffman’s
balance sheet ? - What account will indicate that lease payments have been made?
- Assume that the lease is treated as a capital lease.
- Prepare any journal entries needed when the lease is signed. Explain why the value of the leased asset is not recorded at $6,040
- Prepare the
journal entry to record the first lease payment on December 31, 2016. - Calculate the amount of
depreciation expense for the year 2016. - At what amount would the lease obligation be presented on the balance sheet as of December 31, 2016?
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