Applying New Lease Accounting Standards for Operating Leases On January 1 of the current year, CCH Corporation entered into the following lease contract. Based on the facts, CCH Corporation classifies the lease as an operating lease. Details of lease contract Leased asset Office space Lease term 5 |years Annual lease payment $115,487 Upfront fees $10,000 Cost of debt capital 5% Note: Complete the entire question in Excel and format each answer to two decimal places. Then enter the answers into the provided spaces below with two decimal places. a. Explain how the facts support the dassification of the lease as an operating lease.| Value of the leased asset is not being conveyed to CCH = |v b. Determine the amount of the lease liability that CCH will add to its balance sheet at the inception of the lease. Amount of lease liability $ 499,908 v n 1. What amount will be added to the balance sheet as an asset? $ 509,998 + 2. What will CCH Corporation call the asset on the balance sheet?| Right-of-use asset % |v* d. Prepare a lease amortization schedule that shows the interest and principal portions of each lease payment. Implicit Interest Lease Amortization Lease Liability, End Lease Liability, (Lease Liability, (Lease payment - (Lease Liability, Start - 1= Start x cost of debt) LT T S ] (R LT 1'% 499,998 + 3 25000 v % 90,488 v 3 409,512 + 2 409,512 + 20475 + 95011 + 314,500 + 3 314,500 + 15725 + 99,762 v 214,738 +# 4 214,738 +# 10,737 + 104,750 + 109,988 + 5 109,988 5,500 + 109,988 0 5 109,988 5,500 V 109,988 v OV e. Use the financial statement effects template to record (a) the lease inception and (b) lease payment for year one and for (c) year two of the lease term. Also show the asset and lease amortization for those same two years. Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction. Note: Indicate a decrease in an account category by including a negative sign with the amount. $ in millions) Balance Sheet Income Statement Transaction Cash Noncash Assets Liabilities Contribcapital Earned Revenues Expenses Net Asset Capital Income (a) 0 x O X = O X OV OV Ov - OV OV Cash Right-of-use asset Lease liability V N/A V N/A + M/A V N/A (b) 0 X O X = O X OV O X O V - O X O X Cash Right-of-use asset Lease liability V N/A Retained earnings M/A * Rent expense A (c) 0 x OX = O X OV 0 X OV O X Cash Right-of-use asset Lease liability V N/A Retained earnings M/A Rent expense f. At the end of the current year, what additional disclosure would CCH make in its footnotes pertaining to the four remaining lease payments? December 2020 2021 $ 115,487 v 2022 115,487 2023 115,487 2024 115,487 v 2025 Ov Thereafter Ov Total undiscontinued lease payments 461,948 Imputed interest 0 X Total Operating lease liability $ 461,948 Weighted average remaining lease life in years Weighted average discount rate 5 % v