2a. Assets: a. Cash b. Lease Obligation c. Leased Asset d. Leased Asset Expense e. Rent Expense f. No entry

Liabilities: a. Cash b. Interest Payable c. Lease Obligation d. Leased Asset e. Leased Asset Expense f.No Entry

Revenues: a. Cash b. Interest Payable c. Lease Obligation d. Leased Asset e. Leased Asset Expense f. No Entry

Expense: a. Cash b. Lease Obligation c. Leased asset d. Leased Asset Expense e. Rent Expense f. No Entry

a. Future Value b. Present Value

2b.

Assets: a. Cash b. Interest Expense c. Interest Payable d. Interest Revenue e. Leased Asset f. No entry

Liabilities: a. Cash b. Lease Obligation c. Lease Asset d. Leased Asset Expense e. Rent Expense f.No Entry

Revenues: a. Cash b. Lease Obligation c. Lease Asset d. Leased Asset Expense e. Rent Expense f. No Entry

Expense: a. Cash b. Interest Expense c. Interest Payable d. Interest Revenue e. Leased Asset f. No Entry

Leased Assets Koffman and Sons signed a four-year lease for a forklift on January 1, 2017. Annual lease payments of $1,670, based on an interest rate of 10%, are to be made every December 31, beginning with December 31, 2017. PV of Annuity of $1 Required: Refer to the table above for present value factors. 1. Assume that the lease is treated as an operating lease. a. Will the value of the forklift appear on Koffman's balance sheet? No b. What account will indicate that lease payments have been made? Lease expense 2. Assume that the lease is treated as a capital lease or finance lease. a. Identify and analyze the effect when the lease is signed. Activity Investing and Financing Accounts Leased Asset Increase, Lease Obligation Increase Statement(s) Balance Sheet only Feedback How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Round answers to the nearest whole dollar. Balance Sheet Income Statement Stockholders' Net Assets Liabilities Equity Revenues Expenses Income Explain why the value of the leased asset is not recorded at $6,680 ($1,670 x 4). The leased asset should be reported at the of the payments which is $ not at $ b. Identify and analyze the effect of the first lease payment on December 31, 2017. Activity Operating and Financing Accounts Cash Decrease, Lease Obligation Decrease, Interest Expense Increase Statement(s) Balance Sheet and Income Statement Feedback How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Round answers to the nearest whole dollar. Balance Sheet Income Statement Stockholders' Net Assets Liabilities Equity Revenues Expenses Income Feedback c. Calculate the amount of depreciation expense for the year 2017. Round answer to the nearest whole dollar. $ d. At what amount would the lease obligation be presented on the balance sheet as of December 31, 2017? Round answers to the nearest whole dollar. Current liability portion Long-term liability portion $