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i only need part 2 of this questions answered. the chart is what i must fill in Question 1 Yuan Company acquired an equipment on
i only need part 2 of this questions answered. the chart is what i must fill in
Question 1 Yuan Company acquired an equipment on a 10-year non-cancelable lease on January 1, 20X1. There were annual lease payments of $200 at the end of each of the ten years. The market interest rate was 10% compounded annually. Assume that the lease year coincides with the fiscal year. Present value of $1 annuity (n=10, i=10%) = 6.1446. Note that the useful life of the equipment is 12 years. 1. According to GAAP, is the above lease a capital or an operating lease? Why? 2. Irrespective of your answer to part 1, assume that the lease is a capital lease. Show the entries that the company will make at the inception of the lease and during the first two years of the lease term. (Use straight-line amortization method). 8 9 Question 1-2 (Ir the lease is capital lease) Accumulated Amortisation Lease Obligation Retained Farning Comments on Retained Faming Equipment 10 Date Cash Leonellold 11 1/1/20X1 12 12/31/20X1 13 12/31/20X1 14 12/31/20X2 35 12/31/20 16 whether it affects revenues, expenses (type of expense), etc 12 Question 2
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