Exercise 15-12 (Algo) Lessee; finance lease; effect on financial statements (LO15-2] At January 1, 2021, Caf Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement. The lease agreement specifies annual payments of $29,000 beginning January 1, 2021, the beginning of the lease, and at each December 31 thereafter through 2028. The equipment was acquired recently by Crescent at a cost of $216,000 (its fair value) and was expected to have a useful life of 12 years with no salvage value at the end of its life. (Because the lease term is only 9 years, the asset does have an expected residual value at the end of the lease term of $76,131) Crescent seeks a 10% return on its lease investments. By this arrangement, the lease is deemed to be a finance lease. (FV of $1. PV of $1. EVA of $1. PVA of S1, EVAD of $1 and PVAD of $1 (Use appropriate factor(s) from the tables provided. Round your intermediate calculations to the nearest whole dollar amount.) Required: 1. What will be the effect of the lease on Caf Med's earnings for the first year (ignore taxes)? (Enter decreases with negative sign.) 2. What will be the balances in the balance sheet accounts related to the lease at the end of the first year for Cafe Med ignore taxes)? (For all requirements, round your intermediate calculations and final answers to the nearest whole dollar) 1. Effect on earnings 2. Lease payable balance (end of year) Right-of-use asset balance (end of year) BLE 1 Future Value of $1 = $1(1+ 5.04 6.046 7.09 8.09 9.096 10.09 110% 12.096 20.0% 1.06000 107000 1.10000 1.11000 NT 1.04 1.59 2056 2.5% 1046 3.5% 4.09 4.5% 5.5% 1 101000 101500 102000 102500 101000 103500 104000 104500 105000 105500 2 1.02010 1.03022 104010 1.05063 1.06090 1.07123 1.08160109203 110250 1.11303 3 103030 1.04568 106121 1.07689 109273 110872 1.12486 114117 115763 117434 4 104060 106136 106243 110381 112551 1.14752 116986 119252 121551 1.21862 5 105101 107728 110408 213141 115927 1.18769 1.21665 124615 1.27628 1.30095 1.08000 1.16610 1.09000 1.18810 1.12000 1.25-410 1.20000 1.44000 1.12360 114490 1.21000 1.23210 125971 1.29503 136763 1.40493 1.19102 1.26245 131823 122501 1.31080 1.40255 1 33100 146410 136019 1.72800 2.07300 1.51807 1.57352 1.41158 1.53862 1.46933 1.61051 1.68506 1.76234 2.483 1.41852 1 50073 1.97380 1 50163 61.00152 1.09344 112616 1.15989 19405 1.22926 126532 130226 1010 1.37884 710714 L10984 114869 1869 1.229871 27228 131593 136086 140710 1.45468 8112649 117166 121540 126677 131681 16857 142210 147746 15169 9 109369114339 1.19509 124586 1.30477 136290 142331 1.48610 35133 1.61909 101 10462 1.16054 1.21899 123008 1.34392 1.41066 148024 1.35297 162859 1.70814 2.21066 1 6057 1.71819 1.58687 17132 1.85093 19900 1.67710 182804 199256 1.59385 1.77156 1.94872 2.14359 235795 2.59374 1.87041 207616 230454 2.55804 283942 2 96598 3.5318 4.29982 5.15978 6.19174 2.47596 2.77305 168948 217189 1.63846 196715 1.790RS 2.15892 236736 3.10585 1.89830 258013 2.85312 743008 210485 225219 3.47855 39598 281266 11 111567 1.17795 1.24137 131209 138425 45997 159945 162285 1014 1.80209 12112653 1.19562 126134134489 142576 151107 160108 109588 17956 190121 13 1.13809 121355 129361 137851 1.40153 156996 166507 77210 1.68505 200571 14 1.1497 1.23176 131948 1.41297 151259 161869 173168 185194 197993 211609 15 116097 1.25023 134587 1.41830 155797 167535 14 193528 2079 22248 201220 2.13293 8.91610 2.33161 2.51817 2.71962 2.93719 3.17217 3.45227 2.40985 257853 275903 10 09932 3.15176 3.49845 3.88328 431044 4.78459 22000 305510 3.34173 3.64348 12.83918 239656 379750 4.17735 547357 15.40702 $ 31089 18.48343 4.59497 505447 5.89509 16 117358 126899 137279 148451 160171 173399 1.8729209237 2.18287 2.35526 17 11840 1.28802 40034 152162 16526517946 194790 2.11338 229202 2.48480 18 1915 1.30734 142525 155566 1.70243 185749 2.02582 220848 2.40662 262147 19 120811 1.32095 145681 15986575351192250 210685 2 10786 2.526952.76565 20122019 1.34636 143595 163862 180611 1.91979 2.19112 2.41171 2.65330 2.91776 2.54035 2.69277 2.85434 3.02500 3.20714 2.95216 3.1582 337993 3.61653 3.86968 3.43594 3.70002 3.99002 431570 466096 3.97031 4.32763 4.71712 5.14166 5.60441 5.55992 611591 654355 7.26334 806231 6.13039 6.36604 75897 8.61276 9.646.99 31 94800 0.72750 38 33700 21123219 136706151567 167958 186029 205943227877 252074278596 07823 5.03383 6.10581 740035 391917 10.80385 46.00512 25126143 145095 164061185994 20937236324 2665843.0054338635381319 4.29187 5.42743 684345 8.62108 1081471 13 5E546 17.00005 953922 30134785156308131116209757 242726 28007932410 3.74532 4.32194 498195 5.74349 761226 10.06.206 13.26768 17419402289230 29.95992 237 37631 40148686 181402220804108506316204 395926430102581616 7019951331 10.28572 1497446 21.72452314012452592605000379305097 146977160 Exercise 15-12 (Algo) Lessee; finance lease; effect on financial statements (LO15-2] At January 1, 2021, Caf Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement. The lease agreement specifies annual payments of $29,000 beginning January 1, 2021, the beginning of the lease, and at each December 31 thereafter through 2028. The equipment was acquired recently by Crescent at a cost of $216,000 (its fair value) and was expected to have a useful life of 12 years with no salvage value at the end of its life. (Because the lease term is only 9 years, the asset does have an expected residual value at the end of the lease term of $76,131) Crescent seeks a 10% return on its lease investments. By this arrangement, the lease is deemed to be a finance lease. (FV of $1. PV of $1. EVA of $1. PVA of S1, EVAD of $1 and PVAD of $1 (Use appropriate factor(s) from the tables provided. Round your intermediate calculations to the nearest whole dollar amount.) Required: 1. What will be the effect of the lease on Caf Med's earnings for the first year (ignore taxes)? (Enter decreases with negative sign.) 2. What will be the balances in the balance sheet accounts related to the lease at the end of the first year for Cafe Med ignore taxes)? (For all requirements, round your intermediate calculations and final answers to the nearest whole dollar) 1. Effect on earnings 2. Lease payable balance (end of year) Right-of-use asset balance (end of year) BLE 1 Future Value of $1 = $1(1+ 5.04 6.046 7.09 8.09 9.096 10.09 110% 12.096 20.0% 1.06000 107000 1.10000 1.11000 NT 1.04 1.59 2056 2.5% 1046 3.5% 4.09 4.5% 5.5% 1 101000 101500 102000 102500 101000 103500 104000 104500 105000 105500 2 1.02010 1.03022 104010 1.05063 1.06090 1.07123 1.08160109203 110250 1.11303 3 103030 1.04568 106121 1.07689 109273 110872 1.12486 114117 115763 117434 4 104060 106136 106243 110381 112551 1.14752 116986 119252 121551 1.21862 5 105101 107728 110408 213141 115927 1.18769 1.21665 124615 1.27628 1.30095 1.08000 1.16610 1.09000 1.18810 1.12000 1.25-410 1.20000 1.44000 1.12360 114490 1.21000 1.23210 125971 1.29503 136763 1.40493 1.19102 1.26245 131823 122501 1.31080 1.40255 1 33100 146410 136019 1.72800 2.07300 1.51807 1.57352 1.41158 1.53862 1.46933 1.61051 1.68506 1.76234 2.483 1.41852 1 50073 1.97380 1 50163 61.00152 1.09344 112616 1.15989 19405 1.22926 126532 130226 1010 1.37884 710714 L10984 114869 1869 1.229871 27228 131593 136086 140710 1.45468 8112649 117166 121540 126677 131681 16857 142210 147746 15169 9 109369114339 1.19509 124586 1.30477 136290 142331 1.48610 35133 1.61909 101 10462 1.16054 1.21899 123008 1.34392 1.41066 148024 1.35297 162859 1.70814 2.21066 1 6057 1.71819 1.58687 17132 1.85093 19900 1.67710 182804 199256 1.59385 1.77156 1.94872 2.14359 235795 2.59374 1.87041 207616 230454 2.55804 283942 2 96598 3.5318 4.29982 5.15978 6.19174 2.47596 2.77305 168948 217189 1.63846 196715 1.790RS 2.15892 236736 3.10585 1.89830 258013 2.85312 743008 210485 225219 3.47855 39598 281266 11 111567 1.17795 1.24137 131209 138425 45997 159945 162285 1014 1.80209 12112653 1.19562 126134134489 142576 151107 160108 109588 17956 190121 13 1.13809 121355 129361 137851 1.40153 156996 166507 77210 1.68505 200571 14 1.1497 1.23176 131948 1.41297 151259 161869 173168 185194 197993 211609 15 116097 1.25023 134587 1.41830 155797 167535 14 193528 2079 22248 201220 2.13293 8.91610 2.33161 2.51817 2.71962 2.93719 3.17217 3.45227 2.40985 257853 275903 10 09932 3.15176 3.49845 3.88328 431044 4.78459 22000 305510 3.34173 3.64348 12.83918 239656 379750 4.17735 547357 15.40702 $ 31089 18.48343 4.59497 505447 5.89509 16 117358 126899 137279 148451 160171 173399 1.8729209237 2.18287 2.35526 17 11840 1.28802 40034 152162 16526517946 194790 2.11338 229202 2.48480 18 1915 1.30734 142525 155566 1.70243 185749 2.02582 220848 2.40662 262147 19 120811 1.32095 145681 15986575351192250 210685 2 10786 2.526952.76565 20122019 1.34636 143595 163862 180611 1.91979 2.19112 2.41171 2.65330 2.91776 2.54035 2.69277 2.85434 3.02500 3.20714 2.95216 3.1582 337993 3.61653 3.86968 3.43594 3.70002 3.99002 431570 466096 3.97031 4.32763 4.71712 5.14166 5.60441 5.55992 611591 654355 7.26334 806231 6.13039 6.36604 75897 8.61276 9.646.99 31 94800 0.72750 38 33700 21123219 136706151567 167958 186029 205943227877 252074278596 07823 5.03383 6.10581 740035 391917 10.80385 46.00512 25126143 145095 164061185994 20937236324 2665843.0054338635381319 4.29187 5.42743 684345 8.62108 1081471 13 5E546 17.00005 953922 30134785156308131116209757 242726 28007932410 3.74532 4.32194 498195 5.74349 761226 10.06.206 13.26768 17419402289230 29.95992 237 37631 40148686 181402220804108506316204 395926430102581616 7019951331 10.28572 1497446 21.72452314012452592605000379305097 146977160