A D E F G 2 3 4 5 6 2 yrs 8 9 No 1 Problem 6. Following are the terms of a lease entered into on January 1, 2020. [LC, implicit unknown] FMV of asset at inception of lease $500,000.00 Estimated residual value of asset at lease termination $80,000.00 Portion of residual value guaranteed by Lessee $50,000.00 Lessor's amortized cost of asset at inception of lease $500,000.00 Duration of lease 7 Lease payment amount $230,458.00 Frequency of payments annually First payment due at inception of lease? Yes 10 Purchase option that Lessee is reasonably certain to exercise? 11 Title transfers to Lessee at any time during or at end of lease? No 12 Lessor's implicit rate 12% 13 Lessee's incremental borrowing rate 10% 14 Does Lessee know Lessor's implicit rate? 15 Remaining economic life of asset 5 yrs 16 Economic life of asset when new 5 yrs 17 Specialized use asset with no alternative use to Lessor at end of lease? 18 Nonlease components included in lease payment? 19 Initial direct costs incurred by Lessor (assume recorded by Lessor in Misc. 20 Expenses when incurred) 21 Initial direct costs incurred by Lessee (assume recorded by Lessor in Misc. 22 Expenses when incurred) 23 Lessor's fiscal year end 12/31 24 Lessee's fiscal year end 12/31 25 Required 26 27 1. For the following lease, prepare amortization schedule and lease-related entries booked by Lessor and 28 Lessee over the entire lease term. no no no none none 29 30 Complete the amortization schedule by entering the appropriate values in the green boxes 31 pmt interest principal balance 31 32 Lessee amortization schedule 33 34 date 35 36 37 38 39 Lessor amortization schedule 40 41 date 1/1/20 1/1/20 12/31/20 $230,458 $230,458 pmt interest principal balance 42 43 1/1/20 1/1/20 12/31/20 12/31/21 $230,458.00 $230,458.00 44 45 46 + 47 Enter your entries below. Choose the account from the drop-down list in the yellow cell. Enter the amount of the entry in the green box 48 Entries by Lessee at Inception of lease on 1/1/2020: 49 Account Debit Credit 50 1 51 1 52 1 53 1 54 55 56 Entries by Lessor at inception of lease on 1/1/2020: 57 Account Debit Credit 58 2 59 2 60 2 61 62 2 Debit Credit 63 64 Entries by Lessee at 12/31/2020: 65 Account 66 67 68 69 70 71 72 73 74 Entries by Lessor at 12/31/2020: 75 Account 76 77 3 3 3 3 3 Debit Credit 4 4 Debit Credit 79 BO 81 Entries by Lessor at 12/31/2021 82 Account 83 84 85 86 87 88 89 Entries by Lessee at 12/31/2021 90 Account 91 + 5 5 5 Debit Credit 92 om 1 Column1 2 Accumulated lepreciation (Bal. Sht) 3 Cash (Bal. Sht 4 Deferred rent revenue (Bal. Sht) 5 Equipment (B. 1. Sht) 6 Lease payable (Bal. Sht) 7 Lease receivaille (Bal. Sht) 8 Note payable Bal. Sht) 9 Prepaid service contract (Bal. Sht) 10 Right-of-Use asset (Bal. Sht) 11 Warehouse (el. Sht) 12 Amortization pxpense (Inc. Stmt) 13 Cost of goods sold (Inc. Stmt) 14 Gain on sale of warehouse (Inc. Stmt) 15 Interest experse (Inc. Stmt) 16 Interest revenue (Inc. Stmt) 17 Lease expense (Inc. Stmt) 18 Lease revenue (Inc. Stmt) 19 Misc. expenses (Inc. Stmt) 20 Rent revenue Inc. Stmt) 21 Sales revenue Inc. Stmt) 22 23 24 25 26 27 28 29 30 31 32
