Leased Assets Koffman and Sons signed a four-year lease for a forklift on January 1, 2017. Annual lease payments of $1,216, based on an interest rate of 6%, 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.

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 Leased Asset 4,213 Lease Obligation 4,213 Explain why the value of the leased asset is not recorded at $4,864 ($1,216 x 4). The leased asset should be reported at the present value of the payments which is s 4,213 X not at $ 5,980 x 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) 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 Revenues Expenses Income Equity -253 Cash -1,216 Lease Obligation -963 -253