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Account for and compare Leases Using Finance and Operating Lease Methods Core Co. leased a piece of manufacturing equipment from E-So Co. with the following
Account for and compare Leases Using Finance and Operating Lease Methods Core Co. leased a piece of manufacturing equipment from E-So Co. with the following terms: Annual lease payment: $1,100,000 Term of lease: 5 years Interest rate: 4.00% Lease commences on January 1, 2020 Payments are made on December 31 of each year in the lease term Compute the value of the right-of-use asset and the lease liability on the date the lease commences. Note: Round answers to the nearest dollar. 0 Value of the right-of-use asset $ Value of lease liability $ 0 Record the transactions related to the lease for January 1, 2020 and December 31, 2020 using the financial statement effects template, assuming the lease is classified as a finance lease. Note: Round answers to the nearest dollar. Use negative signs with answers when appropriate. Balance Sheet Income Statement Noncash Contrib. Earned Transaction Cash Asset + Asset Liabilities Capital Capital Revenues Expenses - Net Income 1/1/20:Lease inception 0 - 0 = 0 0 0 - 0 = 0 12/31/20:Annual amortization expense 0 + 0 = 0 - 0 - 0 0 - 0 = 0 12/31/20:Lease payment 0 = 0 + 0 + 0 0 - 0 = 0 + 0 - 0 Record the transactions related to the lease for January 1, 2020 and December 31, 2020 using the financial statement effects template, assuming the lease is classified as a operating lease. Note: Round answers to the nearest dollar. Use negative signs with answers when appropriate. Balance Sheet Income Statement Noncash Contrib. Earned Transaction Cash Asset + Asset Capital Capital Revenues Expenses - Net Income 1/1/20:Lease inception 0 - 0 = 0 0 0 12/31/20:Lease payment 0 - 0 0 12/31/20:Lease expense 0 - 0 - 0 0 = 0 Liabilities + 0 0 0 = 0 + 0 = 0 0 0 0 = 0 - 0
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