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-11 Question 10 of 10 Current Attempt in Progress Oakridge Leasing Corporation signs an agreement on January 1, 2020, to lease equipment to Blossom Limited.

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-11 Question 10 of 10 Current Attempt in Progress Oakridge Leasing Corporation signs an agreement on January 1, 2020, to lease equipment to Blossom Limited. Oakridge and Blossom follow ASPE. The following information relates to the agreement. 1. 2. 3. 4. The term of the non-cancellable lease is five years, with no renewal option. The equipment has an estimated economic life of six years. The asset's fair value at January 1, 2020, is $85,000. 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 $6,200, which is guaranteed. Blossom Limited assumes direct responsibility for all executory costs, which include the following annual amounts: $910 to Rocky Mountain Insurance Ltd. for insurance and $1,610 to James Township for property taxes. The agreement requires equal annual rental payments of $20,182 to Oakridge, the lessor, beginning on January 1, 2020. The lessee's incremental borrowing rate is 13%. The lessor's implicit rate is 12% and is known to the lessee. Blossom Limited uses the straight-line depreciation method for all equipment Blossom uses reversing entries when appropriate. 5. 6. 7. 8. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. Calculate the PV of the future minimum lease payments using any of the following methods: (1) factor tables, (2) a financial calculator, or (3) Excel functions. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 1,452.) Present Value $ -11 Question 10 of 10 Prepare an amortization schedule for Blossom Limited for the lease term. Use Excel. (Hint: You may find the ROUND formula helpful for rounding in Excel.) (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 1,452.) Blossom Limited (Lessee) Lease Amortization Schedule Annual Lease Date Payment Interest on Unpaid Obligation Reduction of Lease Obligation Balance of Lease Obligation $ 1/1/20 1/1/20 1/1/21 1/1/22 1/1/23 1/1/24 1/1/25 $ $ $ eTextbook and Media List of Accounts Prepare all of Blossom's journal entries for 2020 to record the lease agreement and the lease payments. LeBlanc's accounting period ends on December 31. Ignore payments of insurance and property taxes. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts. Round answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit 1/1/20 (To record inception of lease and first lease payment.) 12/31/20 (To record interest.) (To record depreciation expense.) eTextbook and Media List of Accounts

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