Koliman and Sons signed a four-year lease for a forkift on zanuary 1, 2017. Annual lease payments of \$1,456, based on an interest roth of 10w, are th be made every Dectimber 31, beginning with December 31, 2017 . PV of Anmalty of 51 Required: Refer to the tabie above for present value factors. 1. Assume that the lease is treated as an operating lease. a. Will the value of the forkift appear on Kotfinan's bolance aheet? b. What account wili indicate that lease payments hove been made? "GeaM, was From the viewpoint of the lessee, there are two types of lease agreements: eperating ant caphat, in an operating inasie, the iessee acevires the ryht to use an asset for a le-ted period of time. The leisee is not reguired to record the right to use the areperty as an asiet or to record the sbiligation for payments as a liabilty. 2. Assume that the iease is treated as a capital lease of finance lease. How does this entry affect the accounting equatlon? If a financial statenent item is not affected, seiect "No Entry" and leave the amount box blank. If the effect on a francial statement item is negative, Le, a decrease, be sure to enser the arswer with a minus sign. Round arowers to the nearnes whole dolior. Explain why the value of the leased asset is not recorded at $5,824($1,4564). The leased asset should be reported at the of the pyyments which is 1 Toren By wat Partaly conect b. Identify and andyze the efiect of the fint iease payment on Decemoer 31,2017 . Activity Accounts Cash Decmase, Lease Obligation Decresese, taterest fxpense increase 5tatement(s) Kotimar and Sons signed a founyear lease for a forkif on zenuary 1, 2017. Annwal lease poyments of \$1, 456, based on an interest rath of 10w, are to be made every Decinber 31, bepinning with December 31, 2017. PV of Anmulty of 51 Required: Refer to the table above for present value factors. 1. Assume that the lease is treated as an operating lease. a. Will the value of the forkift appear on Kotfinan's baiance aheet? b. What account wei indicate that lease payments have been made? From the viewpoint of the lessee, there are two tyees of lease agreements: eperating ant caphat, in an opersting lease, the iessee acevires the rivht to use an asset for a lie ted period of time. The lessee is not required to recard the right to use the aroperty as an asiet or to record the sbligation for payments as a labilty. 2. Assume that the lease is treated as a capital iease or finance lease. does this entry affect the acrounting equation? a financial statement iteen is not affected; select "No Bntry" and leave the amount box biank. If the effect on a financial skatement item is negative, L.e, a decrense, be sure to enter the frower with a minus sign. Round arswers to the nearest whole dollar. Explain why the value of the lensed asset is aot recarded at s5,824 (51,456 4). The iessed asset should be reported at the of the payments which is I Y Creat Wr was Pritaly conect b. Ieentify and analyze the effect of the first lease payment on December 31,2017. Actirity. Accounts Cash Decrrase, Lease obligation Decrease, Interest Ixpensen increase Susement(s)