Accounting

Instructions: Answer each of the following questions by filling out the answer blanks below. There is one blank for each question. The answer for Question 1 goes in the first blank, for Question 2 in the second blank, and so on and so forth. Ensure that numerical responses are in comma format and are rounded to the nearest dollar. For example: 1; 50; 1,000; 150,000; 1,000,000; etc. Do not include symbols (i.e. $) or decimals in numerical answers. Other specific instructions might be present in the question, so make sure that you follow those as well if they are present. Failure to follow these instructions will result in answers being marked incorrect. While most answers will be numerical, some may be alphanumerical, meaning that you will include words and/or numbers. Brittany Medical manufactures lithotripters. Lithotripsy uses shock waves instead of surgery to eliminate kidney stones. TriStar Leasing purchased a lithotripter from Brittany for $2,000,000 and leased it to St. Thomas Urologists Group, Inc., on January 1, 2021. Both companies recognize depreciation and amortization on a semiannual basis. Lease Description: Semiannual lease payments $50,000 due at June 30 and Dec 31 Lease term 2 years No residual value; no purchase option Economic life of lithotripter 5 years Implicit interest rate & lessee's incremental borrowing 12% rate Fair value of asset $2,000,000 1. How should this lease be classified by St. Thomas Urologists Group? 2. How should this lease be classified by TriStar Leasing? 3. What is value of the right-of-use asset on St. Thomas Urologists Group balance sheet on January 1, 2021? 4. By what amount will the lease payable be reduced as a result of the first payment on June 30, 2021? 5. What amount of interest revenue will TriStar Leasing recognize on June 30, 2021? 6. On December 31, 2021, what amount of amortization will St. Thomas Urologists Group report as a result of this leasing agreement