Leased Assets Koffman and Sons signed a four-year lease for a forklift on lanuary 1, 2017. Annual lease payments af $1,652, based on an interest rate of 12%, are to be made every December 31, beginning with December 31, 2017. PV af Annuity of $1 Required: Refer to the table above for present value factors. 1. Assume that the lease is treated as an operating lease Koffman's balance sheet? a. Will the value of the forklift appear No b. What account will indicate that lease payments have been made? Lease expense Feedback 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 Fooback 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 Stockholders Net Equity Revenues Expenses Income Assets Leased Asset Llabilities Lease Obligation 1,660 X 1,660 x o No Entry o No Entry o Explain why the value of the leased asset is not recorded at $6,608 ($1,652 X 4). The leased asset should be reported at the present value of the payments which is 1,660 X not at $ 6.608 Feedback Check My Work 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 Balance Sheet and Income Statement Statement(s) Feedback Check My Works How does this entry affect the accounting Squation? If a financial statement item is not affected, select "No Entry' and leave the amount hax blank. If the effect on a financial statement item is negative, i.c, a decrease, be sure to enter the answer with a minus sign. Round answers to the nearest whole dollar, 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 II Liabilities + Equity Revenues Expenses = Income Interest Expense X 1,850.24 X Lease Obligation 1,850 x -1,850 x No Entry o Cash X -1,850. X -1,850 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. $ 1,367 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 $ 458 Long-term liability portion 1,193 X