Kaluzniak Corporation leased equipment to Moeller, Inc. on January 1, 2020. 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. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Your answer is correct. Determine the nature of the lease to both Kaluzniak and Moeller. The lease is a/an operating lease to Moeller. The lease is a/an operating lease to Kaluzniak. e Textbook and Media List of Accounts Your answer is partially correct. Prepare all necessary journal entries for Moeller in 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit 1/1/20 Cash 1137 Unearned Lease Revenue (To record the lease) Unearned Lease Revenue 1/1/20 1137 Lease Revenue (To record lease payment) 12/31/20 Amortization Expense Right-of-Use Asset Cash e Textbook and Media List of Accounts X Your answer is incorrect. How would the measurement of the lease liability and right-of-use asset be affected if, as a result of the lease 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? (Round answers to decimal places, e.g. 5,275.) Lease liability $ 1137 Right-of-use-asset $ 1137 e Textbook and Media List of Accounts Your answer is partially correct. 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 necessary journal entry for Moeller in 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Debit Credit Date Account Titles and Explanation 1/1/20 Amortization Expense 1137 Right-of-Use Asset 1137 Kaluzniak Corporation leased equipment to Moeller, Inc. on January 1, 2020. 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. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Your answer is correct. Determine the nature of the lease to both Kaluzniak and Moeller. The lease is a/an operating lease to Moeller. The lease is a/an operating lease to Kaluzniak. e Textbook and Media List of Accounts Your answer is partially correct. Prepare all necessary journal entries for Moeller in 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit 1/1/20 Cash 1137 Unearned Lease Revenue (To record the lease) Unearned Lease Revenue 1/1/20 1137 Lease Revenue (To record lease payment) 12/31/20 Amortization Expense Right-of-Use Asset Cash e Textbook and Media List of Accounts X Your answer is incorrect. How would the measurement of the lease liability and right-of-use asset be affected if, as a result of the lease 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? (Round answers to decimal places, e.g. 5,275.) Lease liability $ 1137 Right-of-use-asset $ 1137 e Textbook and Media List of Accounts Your answer is partially correct. 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 necessary journal entry for Moeller in 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Debit Credit Date Account Titles and Explanation 1/1/20 Amortization Expense 1137 Right-of-Use Asset 1137