Based on the following information:

Create an amortization Schedule using the follow format: Amortization schedul Research case 15-1 - Excel Data Review View Tell me what you w 5 : File Home Insert Page Layout Calibri . 11 -A A Paste BIU. 3 2 A Clipboard Font Formulas = == > General $. % Number . 89 Condition Formatting G Alignment 8% 1 Annual interest Rate 2 Years 3 payments per year 4 amount 40,000,000 20 Points) Use PMT function to calculate payment. First payment will not include interest expense 6 Payment interest Balance 8 Payment Date Payment Principal 12/31/00 3/31/01 6/30/01 9/30/01 (25 Points) Use cell 12/31/01 references and formulas 3/31/02 to complete amortization 6/30/02 schedule. Using absolute 9/30/02 values might help. 12/31/02 Failure to use cell 3/31/03 references and formulas 6/30/03 to complete this portion 9/30/03 of the worksheet will 12/31/03 result in loss of 25 points. 3/31/04 6/30/04 9/30/04 12/31/04 3/31/05 6/30/05 9/30/05 To calculate payment go Formulas, Financial, PMT, complete function arguments using cell references where possible. Fv = 0, Type = 1 (since payment made at the beginning) Function Arguments PMT - number - number - number - number F Type IS - number Calculates the payment for a loan based on constant payments and a constant interest rate. Rate is the interest rate per period for the loan. For example, use 69/4 for quarterly payments at 6% APR. Formula result Help on this function OK Cancel "I don't see that in my intermediate accounting text I saved from college," you grumble to a colleague in the accounting division of Dowell Chemical Corporation. This will take some research." Your comments pertain to the appropriate accounting treatment of a proposed sublease of warehouses Dowell has used for product storage. Dowell leased the warehouses one year ago on December 31. The five-year lease agreement called for Dowell to make quarterly lease payments of $2,398,303, payable each December 31, March 31, June 30, and September 30, with the first payment at the lease's beginning. As a finance lease, Dowell had recorded the right-of-use asset and liability at $40 million, the present value of the lease payments at 8%. Dowell records amortization on a straight-line basis at the end of each fiscal year. Today, Danielle Andries, Dowell's controller, explained a proposal to sublease the underused warehouses to American Tankers, Inc., for the remaining four years of the lease term. American Tankers would be substituted as lessee under the original lease agreement. As the new lessee, it would become the primary obligor under the agreement, and Dowell would not be secondarily liable for fulfilling the obligations under the lease agreement. Check on how we would need to account for this and get back to me," she had said. Required: 1. After the first full year under the warehouse lease, what is the balance in Dowell's lease liability? 2. After the first full year under the warehouse lease, what is the carrying amount (after accumulated amortization) of Dowell's leased warehouses? 3. Obtain the relevant authoritative literature on accounting for derecognition of finance leases by lessees using the FASB's Codification Research System. You might gain access from the FASB website (www.fasb.org), from your school library, or some other source. To determine the appropriate accounting treatment for the proposed sublease, what is the specific seven-digit Codification citation (XXX-XX-XX) that Dowell would rely on to determine: a. if the proposal will qualify as a termination of a finance lease, and b. the appropriate accounting treatment for the sublease? 4. What, if any, journal entry would Dowell record in connection with the sublease? Dowell's lease liability Carrying amount of leased warehouses $ 30,816,422 40,000,000 $ 32,000,000 Topic No 3-a. 3-b. 842 840 842 140 Subtopic 20 16 20 Section Paragraph 40 3 2 40 Credit No Transaction General Journal 1 Lease payable Loss on sublease Accumulated amortization S ing right-of-use-asset Debit 30,816,422 1,183,578 8,000,000 40,000,000 Create an amortization Schedule using the follow format: Amortization schedul Research case 15-1 - Excel Data Review View Tell me what you w 5 : File Home Insert Page Layout Calibri . 11 -A A Paste BIU. 3 2 A Clipboard Font Formulas = == > General $. % Number . 89 Condition Formatting G Alignment 8% 1 Annual interest Rate 2 Years 3 payments per year 4 amount 40,000,000 20 Points) Use PMT function to calculate payment. First payment will not include interest expense 6 Payment interest Balance 8 Payment Date Payment Principal 12/31/00 3/31/01 6/30/01 9/30/01 (25 Points) Use cell 12/31/01 references and formulas 3/31/02 to complete amortization 6/30/02 schedule. Using absolute 9/30/02 values might help. 12/31/02 Failure to use cell 3/31/03 references and formulas 6/30/03 to complete this portion 9/30/03 of the worksheet will 12/31/03 result in loss of 25 points. 3/31/04 6/30/04 9/30/04 12/31/04 3/31/05 6/30/05 9/30/05 To calculate payment go Formulas, Financial, PMT, complete function arguments using cell references where possible. Fv = 0, Type = 1 (since payment made at the beginning) Function Arguments PMT - number - number - number - number F Type IS - number Calculates the payment for a loan based on constant payments and a constant interest rate. Rate is the interest rate per period for the loan. For example, use 69/4 for quarterly payments at 6% APR. Formula result Help on this function OK Cancel "I don't see that in my intermediate accounting text I saved from college," you grumble to a colleague in the accounting division of Dowell Chemical Corporation. This will take some research." Your comments pertain to the appropriate accounting treatment of a proposed sublease of warehouses Dowell has used for product storage. Dowell leased the warehouses one year ago on December 31. The five-year lease agreement called for Dowell to make quarterly lease payments of $2,398,303, payable each December 31, March 31, June 30, and September 30, with the first payment at the lease's beginning. As a finance lease, Dowell had recorded the right-of-use asset and liability at $40 million, the present value of the lease payments at 8%. Dowell records amortization on a straight-line basis at the end of each fiscal year. Today, Danielle Andries, Dowell's controller, explained a proposal to sublease the underused warehouses to American Tankers, Inc., for the remaining four years of the lease term. American Tankers would be substituted as lessee under the original lease agreement. As the new lessee, it would become the primary obligor under the agreement, and Dowell would not be secondarily liable for fulfilling the obligations under the lease agreement. Check on how we would need to account for this and get back to me," she had said. Required: 1. After the first full year under the warehouse lease, what is the balance in Dowell's lease liability? 2. After the first full year under the warehouse lease, what is the carrying amount (after accumulated amortization) of Dowell's leased warehouses? 3. Obtain the relevant authoritative literature on accounting for derecognition of finance leases by lessees using the FASB's Codification Research System. You might gain access from the FASB website (www.fasb.org), from your school library, or some other source. To determine the appropriate accounting treatment for the proposed sublease, what is the specific seven-digit Codification citation (XXX-XX-XX) that Dowell would rely on to determine: a. if the proposal will qualify as a termination of a finance lease, and b. the appropriate accounting treatment for the sublease? 4. What, if any, journal entry would Dowell record in connection with the sublease? Dowell's lease liability Carrying amount of leased warehouses $ 30,816,422 40,000,000 $ 32,000,000 Topic No 3-a. 3-b. 842 840 842 140 Subtopic 20 16 20 Section Paragraph 40 3 2 40 Credit No Transaction General Journal 1 Lease payable Loss on sublease Accumulated amortization S ing right-of-use-asset Debit 30,816,422 1,183,578 8,000,000 40,000,000