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the Week 7 Homework - Due 3/11 x Homework Help - Q&A from Onl x | + F-CO mybusinesscourse.com/platform/mod/quiz/attempt.php?attempt=4645031&page=2&cmid=264522 Apps New Tab Q JFS - Ohio Unempl a Amazon.com : hair.. INthe myBusinessCourse |.. BusinessCourse Return to course Support * My Subscriptions eBook e Print Question 3 Partially correct Mark 66.00 out of 101.00 Flag question Analyzing, Interpreting, and Capitalizing Operating Leases On January 1, 2020, Alexander Mack Adventures Inc. entered into land leases that grant unrestricted access to property in Texas where the company plans to build an RV resort. Lease details follow . Lease term: 15 years. . Upfront fees: $450,000 paid in cash. Annual lease payment: $650,000 due at each year-end. . Lessee responsible for property tax and insurance. The company also leased computer equipment with the following details. . Lease term: 4 years. . Upfront fees: $5,000. Annual lease payments: $32,102. . Lessee has option to purchase equipment for $1 at end of lease. Required Note: For the following questions, round your answers to the nearest whole dollar; use rounded amounts for further calculations. a. Given the lease contract facts, determine the classification for each of the two leases (operating or finance). Land lease: Operating lease + Computer equipment lease: Finance lease + b. Determine the amount of the lease liability that Alexander Mack will add to its balance sheet at the inception of each lease. The company has a 9% cost of debt capital. Land lease: $ 5,239,448 Computer equipment lease: $ 1 c. What asset will the company add to its balance sheet for each lease? Land lease: Right-of-use asset Y$ Computer equipment lease: PPE 0 x d. For each lease, prepare an amortization schedule that shows the interest and principal portions of each lease payment. Note: Adjust the final year for any rounding differences. Land Lease: Implicit Interest Lease Amortization Lease Liability, End Lease Liability, (Lease Liability, (Lease payment - (Lease Liability, Start Year Start Start x 9%) Implicit interest) Lease Amortization) 1 $ 5,239,448 v $ 471,550 v $ 178,450 5,060,998 2 5,060,998 455,490 194,510 4,866,488 W 4,866,488 437,984 212,016 4,654,472 4,654,472 418,902 231,098 4,423,374 4,423,374 398,104 251,896 4,171,478 4,171,478 375,433 274,567 3,896,911 3,896,911 350,722 299,278 3,597,633 3,597,633 323,787 326,213 3,271,420 3,271,420 294,428 v 355,572 2,915,848 10 2,915,848 262,426 387,574 2,528, 274 11 2,528,274 227,545 422,455 2, 105,819 12 2, 105,819 189,524 460,476 1,645,343 1,645,343 148,081 501,919 ,143,424 1,143,424 102,908 547,092 596,332 596,332 53,669 596,331 OV Computer equipment lease: Implicit Interest Lease Amortization Lease Liability, End Lease Liability, y, (Lease Liability, (Lease payment - (Lease Liability, Start - Year Start Start x 9%) Implicit interest) Lease Amortization) 1 $ 109,010 * $ 0 x $ 0 x $ 0 * W N 0 x 0 x O X O X 0 x O X O X O X O X 0 x e. What will be the income statement effect of the land lease in 2020? $ 0 * of expense f. What will be the income statement effect of the equipment lease in 2020? $ 0 * of expense g. For fiscal 2020, what additional disclosure would Alexander Mack make in its footnotes pertaining to the remaining land lease payments? December 2020 2021 0 x 2022 0 x 2023 0 x 2024 0 x 2025 0 X Thereafter 0 x Total undiscounted lease payments 0 x Imputed interest 0 x Total operating lease liability 0 x Weighted average remaining lease life in years 0 x Weighted average discount rate 0% > h. On December 31, 2021, what amount will be on the balance sheet (asset and liability) for each of the leases? Asset Liabilities Land lease: $ 0 * $ 0 x Computer equipment lease: $ 0 x 0 x Check Partially correct Marks for this submission: 66.00/101.00. Previous Save Answers Next Copyright @ 2021 Cambridge Business Publishers , All Rights Reserved | Terms of Use | Privacy Policy | Return Policy. | User Guide | Browser Support
