Accounting

Account for and Compare Leases Using Finance and Operating Lease Methods (FSET) Core Co. leased a piece of manufacturing equipment from E-So Co, with the following terms: Annual lease payment: $550,000 Term of lease: 5 years Interest rate: 4% Lease commences on January 1,2023 Payments are made on December 31 of each year in the lease term a. Compute the value of the right-of-use asset and the lease liability on the date the lease commences. b. Prepare a lease liability amortization schedule and right-of-use asset amortization schedule for the lessee. c. Prepare a financial statement effects template to show the effects for Core Co. for January 1, 2023-December 31, 2024, if the lease is classified as a finance lease. d. Prepare a financial statement effects template to show the effects for Core Co. for January 1, 2023-December 31, 2024, if the lease is classified as an operating lease. e. Show the the right-of-use asset value over the term of the lease for finance vs. operating lease classification. - Note: Use negative signs with your answers, when appropriate. - Note: Select "N/A" as your answer if a part of the accounting equation is not affected. - Note: Round answers to the nearest whole dollar. a. Value of the right-of-use asset and lease liability on the date the lease commences =$ b. Lease liability amortization schedule Right-of-use Asset Amortization Schedule - operating lease c. Finance lease: d. Operating lease: e. \begin{tabular}{|l|l|} \hline \multicolumn{2}{|r|}{ Right-of-Use Asset Balance } \\ Finance Lease Operating Lease \\ \hline January 1, 2023 & \\ \hline December 31, 2023 \\ \hline December 31, 2024 \\ \hline December 31, 2025 \\ \hline December 31, 2026 \\ \hline December 31, 2027 & \\ \hline \end{tabular} Account for and Compare Leases Using Finance and Operating Lease Methods (FSET) Core Co. leased a piece of manufacturing equipment from E-So Co, with the following terms: Annual lease payment: $550,000 Term of lease: 5 years Interest rate: 4% Lease commences on January 1,2023 Payments are made on December 31 of each year in the lease term a. Compute the value of the right-of-use asset and the lease liability on the date the lease commences. b. Prepare a lease liability amortization schedule and right-of-use asset amortization schedule for the lessee. c. Prepare a financial statement effects template to show the effects for Core Co. for January 1, 2023-December 31, 2024, if the lease is classified as a finance lease. d. Prepare a financial statement effects template to show the effects for Core Co. for January 1, 2023-December 31, 2024, if the lease is classified as an operating lease. e. Show the the right-of-use asset value over the term of the lease for finance vs. operating lease classification. - Note: Use negative signs with your answers, when appropriate. - Note: Select "N/A" as your answer if a part of the accounting equation is not affected. - Note: Round answers to the nearest whole dollar. a. Value of the right-of-use asset and lease liability on the date the lease commences =$ b. Lease liability amortization schedule Right-of-use Asset Amortization Schedule - operating lease c. Finance lease: d. Operating lease: e. \begin{tabular}{|l|l|} \hline \multicolumn{2}{|r|}{ Right-of-Use Asset Balance } \\ Finance Lease Operating Lease \\ \hline January 1, 2023 & \\ \hline December 31, 2023 \\ \hline December 31, 2024 \\ \hline December 31, 2025 \\ \hline December 31, 2026 \\ \hline December 31, 2027 & \\ \hline \end{tabular}