Leased Assets Koffman and Sons signed a four-year lease for a forklift on January 1, 2017. Annual lease payments of $1,475, based on an interest rate of 89, are to he made every December 31, beginning with December 31, 2017. PV of Annuity of $1 Required: Refer to the table abave for present value factors. 1. Assume that the lense is treated as an operating lease a. Will the value of the forklift appear on Koffman's balance sheet? NO b. What account will indicate that lease payments have been made? Lease expense Fulltech Check trak 2. Assume that the lease is treated as a capital lease or finance lease. a. Identify and analyze the effect when the lease is signed. Activity Investing and Financing Accounts Leased Asset Increase, Lease Obligation Increase Statements) Balance Sheet only Fandtak Chak My hurt How does this entry affect the accounting equation? If a financial statement item is not affected, select 'No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Round answers to the nearest whole dollar TABLE 9-4 Present Value of Annuity of $1 (N) Periods 2% 3% 4% 5% 6% 7% 8% 10% 12% 15% 1 2 .98039 1.94156 2.88388 3.80773 .94340 1.83339 2.67301 3.46511 3 .90909 1.73554 2.48685 3.16987 3.79076 4.35526 4 5 6 4.21236 4.91732 5.58238 7 95238 1.85941 2.72325 3.54595 4.32948 5.07569 5.78637 6.46321 7.10782 7.72173 8.30641 8.86325 9.39357 8 9 10 11 12 97087 1.91347 2.82861 3.71710 4.57971 5.41719 6.23028 7.01969 7.78611 8.53020 9.25262 9.95400 10.63496 11.29607 11.93794 12.56110 13.16612 13.75351 14.32380 14.87747 15.93692 16.93554 17.87684 18.76411 19.60044 .96154 1.88609 2.77509 3.62990 4.45182 5.24214 6.00205 6.73274 7.43533 8.11090 8.76048 9.38507 9.98565 10.56312 11.11839 11.65230 12.16567 12.65930 13.13394 13.59033 14.45112 15 24696 15.98277 16.66306 17.29203 13 4.71346 5.60143 6.47199 7.32548 8.16224 8.98259 9.78685 10.57534 11.34837 12.10625 12.84926 13.57771 14.29187 14.99203 15.67846 16.35143 17.65805 18.91393 20.12104 21.28127 22.39646 .93458 1.80802 2.62432 3.38721 4.10020 4.76654 5.38929 5.97130 6.51523 7.02358 7.49867 7.94269 8.35765 8.74547 9.10791 9.44665 9.76322 10.05909 10.33560 10.59401 11.06124 11.46933 11.82578 12.13711 12.40904 92593 1.78326 2.57710 3.31213 3.99271 4.62288 5.20637 5.74664 6.24689 6.71008 7.13896 7.53606 7.90378 8.24424 8.55948 8.85137 9.12164 9.37189 9.60360 9.81815 10.20074 10.52876 10.80998 11.05108 4.86842 5.33493 5.75902 6.14457 6.49506 6.81369 7.10336 7.36669 7.60608 7.82371 8.02155 8.20141 .89286 1.69005 2.40183 3.03735 3.60478 4.11141 4.56376 4.96764 5.32825 5.65022 5.93770 6.19437 6.42355 6.62817 6.81086 6.97399 7.11963 7.24967 7.36578 7.46944 7.64465 7.78432 7.89566 7.98442 8.05518 6.20979 6.80169 7.36009 7.88687 8.38384 8.85268 9.29498 9.71225 10.10590 10.47726 10.82760 11.15812 11.46992 12.04158 12.55036 13.00317 13.40616 13.76483 14 .86957 1.62571 2.28323 2.85498 3.35216 3.78448 4.16042 4.48732 4.77158 5.01877 5.23371 5.42062 5.58315 5.72448 5.84737 5.95423 6.04716 6.12797 6.19823 6.25933 6.35866 6.43377 6.49056 6.53351 6.56598 15 16 17 18 9.89864 10.37966 10.83777 11.27407 11.68959 12.08532 12.46221 13.16300 13.79864 14.37519 14.89813 15.37245 19 8.36492 8.51356 20 22 24 26 28 8.77154 8.98474 9.16095 9.30657 9.42691 30 11.25778 How does this entry affect the accounting equation? if a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, le, a decrease, be sure to enter the answer with a minus sign. Round answers to the nearest whole dollar Balance Sheet Income Statement Net Assets Llabilities Stockholders' Equity 0 o Revenues Expenses Income Leased Asset 4,889 Lease Obligation 4,889 No Entry ol No Entry 0 0 Explain why the value of the leased asset is not recorded at $5,901 (51,476 x 1). The leased asset should be reported at the present value of the payments which is 4,889 not at $ 5,904 Ferlik Check Wy work Carrect b. Identify and analyze the effect of the first lease payment an December 31, 2017. Activity Operating and Financing Accounts Cash Decrease, Lease Obligation Decrease, Interest Expense Increase Statement(s) Balance Sheet and Income Statement Feedback Crock My Work How does this entry affect the accounting equation? if a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, I., a decrease, be sure to enter the answer with a minus sign. Round answers to the nearest whole dollar. Balance Sheet Income Statement Stockholders' Net Assets Liabilities + Equity Revenues Expenses Income Cash Lease Obligation No Entry 0 Interest Expense c. Calculate the amount of depreciation expense for the year 2017. Round answer to the nearest whole dollar. $ d. At what amount would the lease obligation be presented on the balance sheet as of December 31, 2017? Round answers to the nearest whole dollar. Current liability portion Long-term liability portion $