Accounting chapter 21

Liberation Sans B > A fx A B C D E F G H I Assume that on December 31, 2019, Giles Corp. signs a 10-year, noncancelable lease agreement to lease a storage building from Connecticut Storage Company. The following information pertains to this lease agreement. 1. The agreement requires equal rental payments beginning on December 31, 2019. $ 71,830 2. The fair value of the building on December 31, 2019 $ 525,176 3. Estimated economic life of the building in years Guaranteed residual value of the building Expected residual value Giles depreciates similar buildings on the straight-line method. $ $ 12 10,000 7,000 D 1 2 3 14 15 16 17 18 4. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor. 5. Giles's annual incremental borrowing rate Lessor's implicit rate is not known by Giles. 8% 19 2 ructions: Prepare the journal entries on the lessee's books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2019,2020, and 2021. Giles's fiscal year-end is December 31. Amount to be capitalized includes: Present value of minimum lease payments using Excel's PV function: Debit Credit Lease Amortization Schedule Annual CIBY 89 Reduction on of Liability Lease Liability Date Payment Lasse Liability (b) Suppose the same facts as above, except that the lease specified the following additional items: Incurred legal fees resulting from the execution of the lease Received a lease incentive from Connecticut to enter the lease 5.900 1.000 How would the initial measurement of the lease liability and right-af-use asset be affected under this situation? Calculation of the right-of-use asset: Right-of-use asset