Cole Company leased office equipment from Bean Leasing on 1/1/Year1.The fair value of the equipment was $120,000, and it has an estimated useful life of 10 years.Bean earns 10% on leases of this type.Cole leased it for 6 years and made 6 annual payments of $18,400.The payments occurred on December31 of Year1through Year6.The present value of Coles lease payments at the 10% implicit rate is $80,137.(This is the annual lease payment of 18,400 x thefactor for the PV of an ordinary annuity factor. 1.Is this an operating lease or a financing lease?

IT IS AN OPERATING LEASE

.2.What journal entry will Cole record to reflect the original lease payable obligationon 1/1/Yr1?

3.Complete the amortization table for the lease payable. Ignore any small rounding error at the end.4.

How much ofthe lease payment on 12/31/yr1 is labeled interest on thelease payable amortization schedule?

5.Related to this lease, how will Cole reportas each of the following on the income statementfor Year1?Hint: consider your answer to Question1as we have different reporting for the 2 types of leases.If the accounttitle is not used on the income statement for this type of lease, answer N/A. You will have at least one N/A.a.Lease or rent expenseb.Interest expensec.Amortization expense

6.What is the lease liabilityamount after the payment on 12/31/Yr1?

7.How will Cole report the lease liability on the balance sheet (as a regular liability or as a non-debt liability)?

8.What will Cole report as a right-of use asset on the balance sheet at 12/31/Year1?

9.Does the lessor (Bean Leasing) remove the leased equipment from its assetswhen the lease is assigned? Answer just Yes or No.

10.If Bean (the Lessor)paid a legal fee in connection with executingthe lease documents, how would the cost be treated.(Choose A. or Band you just need to type the letterA. Expense all of the cost in Year1B. Expense evenly over 6 years.