A18-13 Lessee Accounting: Financial Statement Presentation: (LO 18-3) Sondheim Ltd. entered into a lease with New Age Leasing Corp. The lease is for new specialized factory equipment that has a falr value of $2,786,000. The expected useful life of the equipment is 10 years, although its physical life is 12 years. The initial lease term begins on 1 April 20X2 and runs for 10 years. Annual lease payments are $372,000, payable at the beginning of each lease year. Alter the initial lease term, Sondheim has the option of renewing the lease on a year-by-year basis for as long as Sondheim wishes. Since the equipment will be obsolete by that time. Sondheim is not interested in obtaining title to the equipment Other information is as follows: (Round intermediate calculations and final answers to the nearest whole dollar amount.) The Interest rate implicit in the lease is 9% (known by Sondheim). Sondheim's incremental borrowing rate is 8%. . Sondheim will amortize the equipment on a straight-line basis and has a 31 December fiscal year-end. PV L$1. PVA of S1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare the journal entries relating to the lease liability and the leased equipment for Sondheim for 20x2. Including all appropriate adjusting entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Record the interest expense. Note: Enter debits before credits. Date General Journal Debit Credit 31 December 20x2 Record entry Clear entry View general journal 2. What amounts will appear on Sondheim's SFP and SCF for the year ended 31 December 20X2? Statement of financial position Equipment under lease Accumulated depreciationleased equipment $ 0 Lease liability - current Lease liability - long-term Cash flow statement Operating activities, non-cash items add-backs Depreciation expense Interest expense Financing activities - lease payment unnect_Production/bne/Ryerson/beechy7ce/pv1.png TABLE 1-1: Present value of 1: (P/F, 1, 1) P/E 1 (1+1) Repe 26 2.5% 3% 4% 5% 6% 75 8% 10% 11% 12 14% 1 0.98039 0.97561 097087 0.96154 0.95238 0.94340 0.93458 0.92593 0.91743 0.90909 0.90090 0.89295 087719 2 0.96117 0.95181 0.94260 0.92456 0.90703 0.89000 0.87344 0.85734 084168 0.82645 0.81162 0.79719 9.75947 3 0.94232 0.92850 0.91514 0.88900 0.86381 0.83962 0.81630 0.79383 0.77218 075131 0.73119 0.71178 067497 4 0.92385 0.90695 0949 0.85480 0.82270 0.79 209 0.75290 0.73503 0.70843 068301 0.65873 0.63552 059208 00 5 -0.30573 088085 0.85261 082193 0.78353 0.74726 0.71299 0.68058 0.64993 062092 0.59345 0.56743 051937 014 0.59797 0.85230 083748 0.79031 0.74622 0.70496 0.55634 0.63012 0.59627 056147 0.53454 0 50553 0.45559 087056 0.84127 081309 0.75992071068 0.66506 0.62275 0.5829 054703051315 0.18166 0.45235 039954 031 0853490.82075 0.78941 0.73069 0.67551 0527410:58201054027 050187 046651 0.4339304038 0.35656 0.52 9 083675 80075 0.76642070259 064461 059190054393 0.50025046013 DA 2400..19092 0:36061 0.30753 028 10 082035 0.78120 074409067556051391 0.55839 0.5083546.51904231 1554 0.35218032197 02694 0:20 0.80426 075214 0.77242054958058 0.52679047509420889382530350490317280 2818623562 0212 12 0788007435602013 0.5250 055687 967041601039711 0.35553 256 20756 077363 072542 06095 06005 13032 441456 0.367200:32618 02866 0.75751 02271 070773 056112 051 0:50500 420 782 MG0229925 0223199 020062 059041 05552 . 0312275473892090018272228 057362 055391 155 021153018801272287 12 0513 355) 70225107 19 0.15253 6411 0258 049363 041553 0 1450 35094 . 15292 1 1 0.52553 152028 04454 90E 030513 E021 1015351 0.13758016 311800221052017 10.103 DA388 20151101630 GS0425 1353 MI DI 18012285 2016 40573 57 0:49 OM OSO 0.1991 15770 TOS 200 DO KONEN 00 DULU 111 148 0 15173 TABLE 1-3: Present value of an annuity due of n payments of 1: (P/AD, 1, 1) 1 - (1+0) PIAD (1+1)x XE WG 75 EBON- 2% 4% 6% 7% 8 9% 10% 11% 12% 14% 15% 1 1.00000 1.00000 1.00000 1.00000 100000 1.00000 1.00000 1.00000 1.00000 1.00000 100000 1.00000 100000 1.00000 2 2 1.98039 1.97561 1.97087 1.96154 1.95238 1.94340 1.93458 1.92393 1.91743 1.90909 1.90090 189286 187719 1.86937 3 2.94156 2.92742 2.91347 288609 289941 283339 280802 2.78326 2.75911 273554 2.71 252 2.69005264656 2.62571 4 388388 385602 3.82861 3.77509 3.72325 367301 362432 3.57710 3.53129 348685 344371 3.40183 3.32163 3.28923 180773 4.76197 4.71710 4.62990 4.54595 446511 438721 4.31213 4.23972 4.169874.1025403736 3.91371 3.85198 5.715 5.64583 5.57971 5:45182 0.32948 521236 510020 4.99221 1.89966 1.79079 4.69990 4.60478 4.43308 4.352 6,60143 5.50813 6.41719 6.242146.07569 5.91732 5.76654 5.62288 5.4899 535526 5.23054 511141 4.888674.78148 7.471997.34939 7.23028 700205 6.78632 658238 6.38929 6.20637 6.03295 586892 3.71220 5.56 376 5.28830 5.16042 R32548 8,17014 8.01969773274 2.46321 720979 6.97130 6.74664 6.53482 633493 6.14612 5.96764 3.63885 5.48732 10 1.16224 892082 8.78611 843533 10782 7.80164 751523 7.246896.99525 6.75902 5.93705 6.32825 5.967 3.7768 9.929 9.75206 3.53020110908.721738360044 802368 121008741766 7.14457 6.88923 5.60022 6.216126.01877 12 10.10.51121 19252629.7663930641 88967 HA1867 8.1996 7.80519 7499067 20682606.4527352021 11.5754 11 25776 10. 0500 10 3850798325 3.4269 85.16073 7.81369 7492.16.7.19437 6.6662942062 14 12.31837 11.8318 11.6961098565 10:39:57 952093576689 8.48590 10335 7.747742355 6842356.0015 13:1065 12.69091 12 29607 11.1312 101864 10.2949897401921124 8.15 36665981872.62817 700207 6.7243 16 132133138 12.93714 12.118 11375 10.71235 10:10791 9.00 9.060 8606H8190877714212684737 17 1451405300 13.56110 12.0530 11377 11 1090 10.41698137 9.1125637916797199 726506695123 15 1 14.71220 14.16612 12 16567 1227407 1147726 1076322 1012164 361 9.624558.5879 1197372670416 1520 15.35305 14.75351 1260 12.6 11.2760 11.00 10.371974 20141 8.7016274622 12797 15. 15578915 30 14 133 132 131012 TOGOMO 99011 91929360787550377.1983 12.31 169161587147 148 13.46221 12 400 11001 10011 10.100 2513568.9003 8.492623132.2003 107181640 15.000 12.7640 11001101630224 9907505620026895731246 3 112.1664 16.092 155112 14 16300 104154 12:05 11.2007 77159.1757 17.30 15111174461 15.057 1 12.221.7100 10 22663 1439 19 18 17 16 15 14 13.56006 124 10. 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