On January 1 of Year 1, Wayne Inc. signed an eight-year lease for office space for...
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On January 1 of Year 1, Wayne Inc. signed an eight-year lease for office space for $24,000 annually due each January 1, with the first payment due immediately. Wayne has the option to renew the lease for an additional four-year period on or before January 1 of Year 9, at market lease rates at the time of renewal. The remaining economic life of the office is 30 years. Wayne Inc is not aware of the implicit rate of the lease but has an incremental borrowing rate of 7%. Wayne inc. paid $1,000 on January 1 of Year 1 for initial direct costs. Required a. How would Wayne inc. classify the lease? # Lease Liability Schedule Right-of-Lise Asset Schedule Journal Entries b. Prepare a schedule of the lease liability for the first two years of the lease term Note: Round each amount in the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule. On January 1 of Year 1, Wayne Inc. signed an eight-year lease for office space for $24,000 annually due each January 1, with the first payment due immediately. Wayne has the option to renew the lease for an additional four-year period on or before January 1 of Year 9, at market lease rates at the time of renewal. The remaining economic life of the office is 30 years. Wayne Inc is not aware of the implicit rate of the lease but has an incremental borrowing rate of 7%. Wayne inc. paid $1,000 on January 1 of Year 1 for initial direct costs. Required a. How would Wayne inc. classify the lease? # Lease Liability Schedule Right-of-Lise Asset Schedule Journal Entries b. Prepare a schedule of the lease liability for the first two years of the lease term Note: Round each amount in the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule.
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Based on the information provided The lease term is for 8 years from Year 1 to Year 8 Wayne has the ... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0470423684
13th Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, And Terry D. Warfield
Posted Date:
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