Accumulated depreciation (Bal. Sht)

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Equipment (Bal. Sht)

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Right-of-Use asset (Bal. Sht)

Warehouse (Bal. Sht)

Amortization expense (Inc. Stmt)

Cost of goods sold (Inc. Stmt)

Gain on sale of warehouse (Inc. Stmt)

Interest expense (Inc. Stmt)

Interest revenue (Inc. Stmt)

Lease expense (Inc. Stmt)

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Sales revenue (Inc. Stmt)

Problem 2. Following are the terms of a lease entered into on January 1, 2020. [LO] FMV of asset at inception of lease $500,000.00 Estimated residual value of asset at lease termination $80,000.00 Portion of residual value guaranteed by Lessee $0.00 Lessor's amortized cost of asset at inception of lease $500,000.00 Duration of lease 2 yrs Lease payment amount $230.458.00 Frequency of payments annually First payment due at inception of lease? Yes Purchase option that Lessee is reasonably certain to exercise? No Title transfers to Lessee at any time during or at end of lease? No Lessor's implicitrate 12% Lessee's incremental borrowing rate 12% Does Lessee know Lessor's implicitrate? yes Remaining economic life of asset 5 yrs Economic life of asset when new 5 yrs Specialized use asset with no alternative use to Lessor at end of lease? Nonlease components induded in lease payment? no Initial direct costs incured by Lessor (assume recorded by Lessor in Misc. Expenses when incurred) Initial direct costs incurred by Lessee (assume recorded by Lessor in Misc. Expenses when incurred) none Lessor's fiscal year end 12/31 Lessee's fiscal year end 12/31 Required 1. For the following lease prepare amortization schedule and lease-related entries booked by Lessor and Lessee over the entire lease term. no none Complete the amortization schedule by entering the appropriate values in the green boxes Lessee's amortization schedule: date pmt interest principal balance 1/1/2020 1/1/2020 12/31/2020 $230,458 $230,458 Entries by Lessee at inception of lease on 1/1/2020: Account Debit Credit 1 1 1 1 Entry by Lessor at inception of lease on 1/1/2020: Account Debit Credit 2 2 Entries by Lessee at 12/31/2020: Account Debit Credit 3 3 3 3 Entries by Lessor at 12/31/2020: Account Debit Credit 4 4 4 4 Entries by Lessee at 12/31/2021: Account Debit Credit 5 5 Entries by Lessor at 12/31/2021: Account Debit Credit 6 6 Problem 2. Following are the terms of a lease entered into on January 1, 2020. [LO] FMV of asset at inception of lease $500,000.00 Estimated residual value of asset at lease termination $80,000.00 Portion of residual value guaranteed by Lessee $0.00 Lessor's amortized cost of asset at inception of lease $500,000.00 Duration of lease 2 yrs Lease payment amount $230.458.00 Frequency of payments annually First payment due at inception of lease? Yes Purchase option that Lessee is reasonably certain to exercise? No Title transfers to Lessee at any time during or at end of lease? No Lessor's implicitrate 12% Lessee's incremental borrowing rate 12% Does Lessee know Lessor's implicitrate? yes Remaining economic life of asset 5 yrs Economic life of asset when new 5 yrs Specialized use asset with no alternative use to Lessor at end of lease? Nonlease components induded in lease payment? no Initial direct costs incured by Lessor (assume recorded by Lessor in Misc. Expenses when incurred) Initial direct costs incurred by Lessee (assume recorded by Lessor in Misc. Expenses when incurred) none Lessor's fiscal year end 12/31 Lessee's fiscal year end 12/31 Required 1. For the following lease prepare amortization schedule and lease-related entries booked by Lessor and Lessee over the entire lease term. no none Complete the amortization schedule by entering the appropriate values in the green boxes Lessee's amortization schedule: date pmt interest principal balance 1/1/2020 1/1/2020 12/31/2020 $230,458 $230,458 Entries by Lessee at inception of lease on 1/1/2020: Account Debit Credit 1 1 1 1 Entry by Lessor at inception of lease on 1/1/2020: Account Debit Credit 2 2 Entries by Lessee at 12/31/2020: Account Debit Credit 3 3 3 3 Entries by Lessor at 12/31/2020: Account Debit Credit 4 4 4 4 Entries by Lessee at 12/31/2021: Account Debit Credit 5 5 Entries by Lessor at 12/31/2021: Account Debit Credit 6 6