Can someone review this please?
The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Sheffield Company, a lessee. January 1, $105,757 Commencement date Annual lease payment due at the beginning of each year, beginning with January 1, Residual value of equipment at end of lease term, guaranteed by the lessee Expected residual value of equipment at end of lease term Lease term Economic life of leased equipment Fair value of asset at January 1, Lessor's implicit rate Lessee's incremental borrowing rate $46,000 $41,000 6 years 6 years $557,000 8 % 8 % The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment. Click here to view factor tables. Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to o decimal places e.g. 5,275.) SHEFFIELD COMPANY (Lessee) Lease Amortization Schedule Interest on Reduction of Lease Liability Liability Annual Lease Payment Plus GRV Lease Liability 557000 105757 451243 Date 1/1/20 1/1/20 1/1/21 1/1/22 1/1/23 105757 105757 36099 69658 381585 105757 75230 306355 30527 24508 105757 81249 1/1/24 105757 18009 87748 94768 225107 137358 42590 1/1/25 12/31/26 105757 46000 680542 $ 10989 3407 42590 123539 557000 Prepare all of the journal entries for the lessee for and to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee's annual accounting period ends on December 31. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Round answers to o decimal places e.g. 5,275. Record journal entries in the order presented in the problem.) Debit Credit Date Jan. 1, 2020 570000 Account Titles and Explanation Right-of-Use Asset Lease Liability (To record the lease.) 570000 Jan. 1, 2020 Lease Liability 105757 105757 Cash (To record first lease payment.) Interest Expense Dec. 31, 2020 36099 36099 Lease Liability (To record interest.) Dec. 31, 2020 Amortization Expense 95000 95000 Right-of-Use Asset (To record amortization.) Jan. 1, 2021 Lease Liability 36099 36099 Interest Expense (To record second lease payment.) Dec. 31, 2021 Interest Expense 30527 30527 Lease Liability (To record interest.) Dec. 31, 2021 Amortization Expense 95000 95000 Right-of-Use Asset (To record amortization.) Suppose Sheffield received a lease incentive of $5,000 from Faldo Leasing to enter the lease. How would the initial measurement of the lease liability and right-of-use asset be affected? Right-of-use assets 575000 Lease Liability 570000 What if Sheffield prepaid rent of $5,000 to Faldo? Right-of-use assets 580000 Lease Liability $ 570000
