Koffman and Sons signed a four-year lease for a forklift on January 1, 2017. Annual lease payments of $1,326, based on an interest rate of 8%, are to be made every December 31, beginning with December 31, 2017.

PV of Annuity of $1

How does this entry affect the accounting equation? Explain why the value of the leased asset is not recorded at $5,304 ($1,326 x 4). The leased asset should be reported at the

present value of the payments which is $fill in the blank 2153ca0a6070fbc_12 not at $fill in the blank 2153ca0a6070fbc_13

Balance Sheet

Income Statement

Stockholders'

Net

Assets

=

Liabilities

+

Equity

Revenues

Expenses

=

Income

CashLease ObligationLeased AssetLeased Asset ExpenseRent ExpenseNo EntryLeased Asset

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CashInterest PayableLease ObligationLeased AssetLeased Asset ExpenseNo Entry

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CashInterest PayableLease ObligationLeased AssetLeased Asset ExpenseNo EntryNo Entry

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CashLease ObligationLeased AssetLeased Asset ExpenseRent ExpenseNo EntryNo Entry

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