Leased Assets Koffman and Sons signed a four-year lease for a forklift on January 1, 2017. Annual lease payments of $1,783, based on an interest rate of 12%, are to be made every December 31, beginning with December 31, 2017. PV of Annuity of $1 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 forklift appear on Koffman's balance sheet? No b. What account will indicate that lease payments have been made? Lease expense Feedback Check My Work 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 Statement(s) Balance Sheet only 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. Balance Sheet Income Statement Stockholders' + Assets Liabilities Equity Revenues Expenses In Leased Asset 1,783 X No Entry X No Entry Explain why the value of the leased asset is not recorded at $7,132 ($1,783 x 4). The leased asset should be reported at the present value of the payments which is s not at $ Faachack Check My Work Partially correct b. Identify and analyze the effect of the first lease payment on December 31, 2017. Activity Operating and Financing Accounts Cash Decrease, Lease Obligation Decrease, Interest Expense Increase Statement(s) Balance Sheet and Income Statement 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. Balance Sheet Income Statement Stockholders' Net Assets Liabilities + Equity Revenues Expenses Income Cash No Entry No Entry Interest Payable X Feedback Check My Work Partially correct c. Calculate the amount of depreciation expense for the year 2017. Round answer to the nearest whole dollar. $1 5,416 X 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 1,133 x Long-term liability portion 4,283 X TABLE 9-2 Present Value of $1 (N) Periods 2% 3% 4% 5% 6% 7% 8% 10% 12% 15% 1 93458 2 .97087 .94260 91514 .86957 .75614 .65752 3 4 88849 .98039 .96117 .94232 .92385 .90573 .88797 .87056 .85349 96154 92456 .88900 .85480 .82193 .79031 .75992 .94340 .89000 .83962 .79209 .74726 .70496 .87344 .81630 .76290 .71299 .66634 -57175 .89286 .79719 .71178 .63552 .56743 50663 45235 40388 5 49718 6 .92593 .85734 .79383 .73503 .68058 .63017 .58349 .54027 -50025 46319 42888 .86261 .83748 .81309 43233 7 62275 .58201 8 9 .83676 36061 .32197 .66506 .62741 .59190 .55839 -52679 49697 10 .82035 .80426 11 .73069 .70259 67556 .64958 .62480 .60057 .57748 28748 .78941 .76642 .74409 .72242 .70138 .68095 .66112 .64186 .62317 12 13 .95238 .90703 .86384 .82270 .78353 .74622 .71068 .67684 .64461 .61391 .58468 .55684 .53032 .50507 48102 45811 43630 41552 39573 37689 34185 31007 28124 25509 .23138 46884 54393 .50835 47509 44401 41496 .38782 36245 .33873 .31657 .78849 .77303 .75788 .74301 .72845 .71416 .70016 .68643 .67297 14 .90909 .82645 .75131 .68301 .62092 .56447 .51316 .46651 .42410 .38554 35049 .31863 .28966 .26333 .23939 .21763 .19784 .17986 . 16351 .14864 .12285 .10153 .08391 .06934 .05731 44230 15 16 55526 -53391 .51337 49363 17 .60502 .58739 37594 32690 28426 24718 21494 .18691 .16253 .14133 .12289 .10686 .09293 .08081 .07027 .06110 04620 03493 .02642 .01997 .01510 18 .39711 .36770 .34046 .31524 .29189 27027 25025 23171 21455 .18394 . 15770 .13520 .11591 .09938 29586 25668 .22917 20462 18270 16312 14564 13004 11611 10367 08264 .06588 05252 .04187 .03338 19 .57029 47464 .27651 41727 39365 37136 35034 33051 31180 27751 24698 21981 .19583 .17411 20 .55368 45639 25842 22 .64684 42196 22571 24 .52189 49193 46369 43708 .62172 .59758 .57437 26 39012 36069 33348 30832 .19715 .17220 .15040 .13137 28 30 .55207 41199