Chapter 15: Leases Questions 1 and 2.

Need entries for both, amortization table (schedule) for the first and explain what type of lease it is for lessee and lessor.

Lease exercises: 1, On June 30, year 1, Warner, Inc. leased a warehouse equipment from Lilly, Inc. The lease agreement calls for Warner to make semiannual lease payments of $546,915 over a four-year lease term (also the asset's useful life), payable each June 30 and December 31, with the first payment at June 30, year 1. Warner's incremental borrowing rate is 12%, the same rate Lilly used to calculate lease payment amounts. Lilly manufactured the equipment at a cost of $2.8 million. Required: 1. Prepare the appropriate entries for both (a) the lessee and (b) the lessor from the beginning of the lease through the end of year 1. 2. prepare amortization table for two years 3. Explain what type of lease is for both, the lessee and the lessor. 2, On January 1, year 1, Mitchell-Marsh Services, Inc., a computer software training firm, leased several computers under a two-year operating lease agreement from Global Computers Corporation, which routinely finances equipment for other firms at an annual interest rate of 8%. The contract calls for four rent payments of $15,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by Global Computers at a cost of $120,000 and were expected to have a useful life of six years with no residual value. Both firms record amortization and depreciation semiannually. Required: Prepare the appropriate entries for both (a) the lessee and (b) the lessor through the end of year 1. Lease exercises: 1, On June 30, year 1, Warner, Inc. leased a warehouse equipment from Lilly, Inc. The lease agreement calls for Warner to make semiannual lease payments of $546,915 over a four-year lease term (also the asset's useful life), payable each June 30 and December 31, with the first payment at June 30, year 1. Warner's incremental borrowing rate is 12%, the same rate Lilly used to calculate lease payment amounts. Lilly manufactured the equipment at a cost of $2.8 million. Required: 1. Prepare the appropriate entries for both (a) the lessee and (b) the lessor from the beginning of the lease through the end of year 1. 2. prepare amortization table for two years 3. Explain what type of lease is for both, the lessee and the lessor. 2, On January 1, year 1, Mitchell-Marsh Services, Inc., a computer software training firm, leased several computers under a two-year operating lease agreement from Global Computers Corporation, which routinely finances equipment for other firms at an annual interest rate of 8%. The contract calls for four rent payments of $15,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by Global Computers at a cost of $120,000 and were expected to have a useful life of six years with no residual value. Both firms record amortization and depreciation semiannually. Required: Prepare the appropriate entries for both (a) the lessee and (b) the lessor through the end of year 1