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. The company has a 5% cost of debt capital.

• Leased asset: Office space.
• Lease term: 5 years.
• Annual lease payment: $207,877 due at each year-end.
• Upfront fees: $10,000 paid in cash.

Required Note: For the following questions, round your answers to the nearest whole dollar. a. Explain how the facts support the classification of the lease as an operating lease. Answer b. Determine the amount of the lease liability that CCH will add to its balance sheet at the inception of the lease. $Answer c. 1. What amount will be added to the balance sheet as an asset? $Answer 2. What will CCH Corporation call the asset on the balance sheet? Answer 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
Year	Start	Start x 5%)	Implicit interest)	Lease Amortization)
1
2
3
4
5

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
2022
2023
2024
2025
Thereafter
Total undiscontinued lease payments
Imputed interest
Total Operating lease liability
Weighted average remaining lease life in years
Weighted average discount rate	%