E21-19 (L03,4) (Accounting for an Operating Lease) Kaluzniak Corporation leased equipment to Moeller, Inc. on January 1, 2017. The lease agreement called for annual rental payments of $1,137 at the beginning of each year of the 3-year lease. The equipment has an economic useful life of 7 years, a fair value of $7,000, a book value of $5,000, and Kaluzniak expects a residual value of $4,500 at the end of the lease term. Kaluzniak set the lease payments with the intent of earning a 6% return, though Moeller is unaware of the rate implicit in the lease and has an incremental borrowing rate of 8%. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature Instructions (a) Describe the nature of the lease to both Kaluzniak and Moeller. (b) Prepare all necessary journal entries for Moeller in 2017. (c) How would the measurement of the lease liability and right-of-use asset be affected if, as a result of the base contract Moeller was also required to pay $500 in commissions, prepay $750 in addition to the first rental payment and pay $200 of insurance each year? (d) Suppose, instead of a 3-year lease term, Moeller and Kaluzniak agree to a one-year lease with a payment of $1,137 at the start of the lease. Prepare all necessary journal entries for Moeller in 2017. E21-20 (LO3,4) (Accounting for an Operating Lease) Use the information for Kaluzniak Corporation and Moeller, Inc from E21-19. Instructions (a) Explain and show calculationsbow Kaluznink arrived at the amount of the rental payments used in the teacher (b) Prepare the entries for Raluniak for 2017 to How would kaluR S Nounting in part (a change if it incurred legal fees of $200 to execute the lease document and 5500 m advertising expenses for the year in connection with the lease of 4 892 at the liefe years 21-21 (LO3,4) (Accounting for an Operating teaser Rauch lacorporated plece of o pment to Donahue Corporation on Tanuary 1, 2017 The tea m called for parents of the bearning old ear of the years. The equipment has annonceful life as a book valve $20.000, and both parties expect a model Vale a t the the lease c ouche amounts of ca Rauch set the lease payments with the n am e and Deathe r baner sal value of $4,250 E21-19 (L03,4) (Accounting for an Operating Lease) Kaluzniak Corporation leased equipment to Moeller, Inc. on January 1, 2017. The lease agreement called for annual rental payments of $1,137 at the beginning of each year of the 3-year lease. The equipment has an economic useful life of 7 years, a fair value of $7,000, a book value of $5,000, and Kaluzniak expects a residual value of $4,500 at the end of the lease term. Kaluzniak set the lease payments with the intent of earning a 6% return, though Moeller is unaware of the rate implicit in the lease and has an incremental borrowing rate of 8%. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature Instructions (a) Describe the nature of the lease to both Kaluzniak and Moeller. (b) Prepare all necessary journal entries for Moeller in 2017. (c) How would the measurement of the lease liability and right-of-use asset be affected if, as a result of the base contract Moeller was also required to pay $500 in commissions, prepay $750 in addition to the first rental payment and pay $200 of insurance each year? (d) Suppose, instead of a 3-year lease term, Moeller and Kaluzniak agree to a one-year lease with a payment of $1,137 at the start of the lease. Prepare all necessary journal entries for Moeller in 2017. E21-20 (LO3,4) (Accounting for an Operating Lease) Use the information for Kaluzniak Corporation and Moeller, Inc from E21-19. Instructions (a) Explain and show calculationsbow Kaluznink arrived at the amount of the rental payments used in the teacher (b) Prepare the entries for Raluniak for 2017 to How would kaluR S Nounting in part (a change if it incurred legal fees of $200 to execute the lease document and 5500 m advertising expenses for the year in connection with the lease of 4 892 at the liefe years 21-21 (LO3,4) (Accounting for an Operating teaser Rauch lacorporated plece of o pment to Donahue Corporation on Tanuary 1, 2017 The tea m called for parents of the bearning old ear of the years. The equipment has annonceful life as a book valve $20.000, and both parties expect a model Vale a t the the lease c ouche amounts of ca Rauch set the lease payments with the n am e and Deathe r baner sal value of $4,250