LePage Manufacturing Lid agrees to lease machinery to Morand Corporation on July 15, 2020. Both companies report under ASPE. The following information relates to the lease agreement 1. The lease's term is six years with no renewal option and the machinery has an estimated economic life of nine years. 2. The machinery's cost is $420,000 and the asset's fair value on July 15, 2020 is $560,000 3. At the end of the lease term, the asset reverts to LePage, the lessor. At this time, the asset is expected to have a residual value of $80,000 and this value is guaranteed by Morand. Morand depreciates all of its equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on July 15, 2020. LePage uses a 8% interest rate in setting the lease payments and Morand is aware of this rate. Equivalent financing for the machinery could have been obtained from Morand's bank at 8.5% 5. Collectibility of lease payments is reasonably predictable, and no important uncertainties exist about costs yet to be incurred by LePage. 6. LePage charges $6,000 in executory costs over and above the amount of the annual lease payments to recover maintenance costs. REQUIRED: a. Each tab in the Excel template includes instructions on what must be prepared. I 2 Your name 3 Your name Student Number Student Number 5 The blue boxes will be changed to test the accuracy of your work. Use th purpos inform nature format 6 LESSOR LESSEE 7 a Name of company 9 0 Term of lease years 11 2 Economic life of machinery years 13 14 Residual Value $0 The "gre differen 15 6 Interest rate implicit in the leas! 7.5% % 7 8.0%% 8 Incremental borrowing rate Lessed d. Lessor b. Classication Financ. Declaration Rubnic Data a. Payment Alignment Number Styles Celts E30 4 B D 16 Interest rate implicit in the leas 7,5% % 17 18 Incremental borrowing rate 8.0% % 19 20 Maintenance costs 21 22 Cost of machinery 23 24 Fair value of machinery 25 26 Date of start of lease 27 2a Company's year end date 29 30 Fair value of equipment si at end of lease 32 13 Declaration Rubric Data a. Payment b. Classification Lessee d. Lessor e Finance Ready Circular References Clipboard Formatting Font Alignment Number E15 fx A B D Parta (2 marks): Calculate the annual total payment required. 3 Future Value (FV) Number of periods (N) 5 Rate = Present value (PV) - Type 3 Payment (PMT) No amounts should be typed in ont referenced from your "Data" worksh Please delete this text box. 0 1 2 Total cash payment required: AwN 15 0 000 Declaration e. Financ Rubric b. Classification Data Lessee ++ a. Payment d. Lessor C File Home insert Draw Page Layout Formulas Data Review View Help Arial 14 ub > . General Paste - ' ' a-A- BIU- ins De - $%8-98 Conditional Format as Cell Formatting Table Styles Styles Clipboard Fol Font 5 Alignment Number M16 A D E F G H Part c: LESSEE i) (5 marks) Calculate the lease liability and prepare an amortization table for the lease from the perspective of the lessee. Use the effective interest method. 11) (17 marks) Prepare all of the journal entries and any adjusting journal entries Morand would make in 2020 and 2021 related to the lease arrangement, assuming the company has a December 31 year end. Future Value (FV) Number of periods (N) Payment (PMT) Rate E Type Present value (PV) No amounts should be typed in on this page. All amounts must be your "Data" worksheet. Please delete this text box. Declaration Rubric Data a. Payment b. Classification c Lessee d. Lessor e Financ 10 ROOVE General- Cory of ACC100 S21 Excel Assignment Template File Home Insert Draw Page Layout Formulas Ghadale Data Review View Help Arial 14 - AA Paste 35 General - u - ===== wo $ - %. Delete - Format Clipboard Sort & Conditional Format Cel Formatting Table Styles Styles Font Alignment 5 Number H13 A D 1 Part d: 3 LESSOR D) (3 marks) Prepare a net lease amortization table for the lease from the perspective of the lessor. Use the effective interest method. ii) (11 marks) Prepare all of the journal entries and any adjusting journal entries LePage would make in 2020 and 2021 related to the lease arrangement, assuming the company has a December 31 year end. Use the Gross method of recording the lease transactions. 5 5 Future Value (FV) Number of periods (N) Payment (PMT) 1 Rate 2 Type Present value (PV) The PV factors are included here for your convenience although you may not need to use them 5 No amounts should be typed in on this page. All amounts must be referenced from your "Data" worksheet. Please delete this text box. Declaration Rubric Data a. Payment Classification cessed d. Lessor Finant Circular References Type here to search o 2 Layo Permutan Dua View Help X Cathri 11 - 13 General - - AA a A- 2.99 BIU- $ - % Conditional Form formatting Table Style Delete- ma Apboard Font C > Parte: Prepare the statement of financial position for the lease for both the lessee and the lessor for 2 consecutive years Identify all balances reported on the statements, being clear of the classification. Assume both companies use a multi-step income statement For the lessor, use the "net" basis of presentation LESSEE Name of Company Partial Statement of Financial Position Date 2020 LESSOR Name of Company Partial Statement of Financial Position 2021 Date 2031 Endo. O Dat a. Payment b. Cassification d. Lesson Financial Statements Lessee Paste $ - % 9 4 Candid CH Forming to say Saut da Alignment Cri 641 X AM San Name of Company Partial income Statement Name of Company Parti come Statement Date Date 2020 2021 200 13 54 36 Bonus marks: (3 marks) Identify the balances reported on the statement of cash flows of the lessee company under the direct method 37 Identify in which section of the statement the items will be shown. Name of Company Partial Statement of Cash Flows Date 20.20 2021 44 . Data Payonet Classification les de Financial Statements indo rady Orfectes De- aA. 5 - % Conditional Format C Formatting Table - Styles A FS Chard Font Alignment un tang Any 22 A H Part 1: (6 marks) The leased asset has a fair value of $50,000 at the end of the lease. Prepare the journal entry (ies) required at the end of the lease and to record the return of the leased asset for the lessee. Bonus marks (3 marks): Prepare the journal entry (les) required at the end of the lease and to record the return of the leased asset to the lessor LESSONUS MARI JOURNAL ENTRIES Date Account LESSEE JOURNAL ENTRIES Date Account title Debid Credit 0-Jan 00 0-Jan-00 No amounts should be typed in on this page. All amounts must be referenced from your "Data" worksheet Please delete this text box. d. Lessor Financial Statements End of Lease b. Classification cessed NG LePage Manufacturing Lid agrees to lease machinery to Morand Corporation on July 15, 2020. Both companies report under ASPE. The following information relates to the lease agreement 1. The lease's term is six years with no renewal option and the machinery has an estimated economic life of nine years. 2. The machinery's cost is $420,000 and the asset's fair value on July 15, 2020 is $560,000 3. At the end of the lease term, the asset reverts to LePage, the lessor. At this time, the asset is expected to have a residual value of $80,000 and this value is guaranteed by Morand. Morand depreciates all of its equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on July 15, 2020. LePage uses a 8% interest rate in setting the lease payments and Morand is aware of this rate. Equivalent financing for the machinery could have been obtained from Morand's bank at 8.5% 5. Collectibility of lease payments is reasonably predictable, and no important uncertainties exist about costs yet to be incurred by LePage. 6. LePage charges $6,000 in executory costs over and above the amount of the annual lease payments to recover maintenance costs. REQUIRED: a. Each tab in the Excel template includes instructions on what must be prepared. I 2 Your name 3 Your name Student Number Student Number 5 The blue boxes will be changed to test the accuracy of your work. Use th purpos inform nature format 6 LESSOR LESSEE 7 a Name of company 9 0 Term of lease years 11 2 Economic life of machinery years 13 14 Residual Value $0 The "gre differen 15 6 Interest rate implicit in the leas! 7.5% % 7 8.0%% 8 Incremental borrowing rate Lessed d. Lessor b. Classication Financ. Declaration Rubnic Data a. Payment Alignment Number Styles Celts E30 4 B D 16 Interest rate implicit in the leas 7,5% % 17 18 Incremental borrowing rate 8.0% % 19 20 Maintenance costs 21 22 Cost of machinery 23 24 Fair value of machinery 25 26 Date of start of lease 27 2a Company's year end date 29 30 Fair value of equipment si at end of lease 32 13 Declaration Rubric Data a. Payment b. Classification Lessee d. Lessor e Finance Ready Circular References Clipboard Formatting Font Alignment Number E15 fx A B D Parta (2 marks): Calculate the annual total payment required. 3 Future Value (FV) Number of periods (N) 5 Rate = Present value (PV) - Type 3 Payment (PMT) No amounts should be typed in ont referenced from your "Data" worksh Please delete this text box. 0 1 2 Total cash payment required: AwN 15 0 000 Declaration e. Financ Rubric b. Classification Data Lessee ++ a. Payment d. Lessor C File Home insert Draw Page Layout Formulas Data Review View Help Arial 14 ub > . General Paste - ' ' a-A- BIU- ins De - $%8-98 Conditional Format as Cell Formatting Table Styles Styles Clipboard Fol Font 5 Alignment Number M16 A D E F G H Part c: LESSEE i) (5 marks) Calculate the lease liability and prepare an amortization table for the lease from the perspective of the lessee. Use the effective interest method. 11) (17 marks) Prepare all of the journal entries and any adjusting journal entries Morand would make in 2020 and 2021 related to the lease arrangement, assuming the company has a December 31 year end. Future Value (FV) Number of periods (N) Payment (PMT) Rate E Type Present value (PV) No amounts should be typed in on this page. All amounts must be your "Data" worksheet. Please delete this text box. Declaration Rubric Data a. Payment b. Classification c Lessee d. Lessor e Financ 10 ROOVE General- Cory of ACC100 S21 Excel Assignment Template File Home Insert Draw Page Layout Formulas Ghadale Data Review View Help Arial 14 - AA Paste 35 General - u - ===== wo $ - %. Delete - Format Clipboard Sort & Conditional Format Cel Formatting Table Styles Styles Font Alignment 5 Number H13 A D 1 Part d: 3 LESSOR D) (3 marks) Prepare a net lease amortization table for the lease from the perspective of the lessor. Use the effective interest method. ii) (11 marks) Prepare all of the journal entries and any adjusting journal entries LePage would make in 2020 and 2021 related to the lease arrangement, assuming the company has a December 31 year end. Use the Gross method of recording the lease transactions. 5 5 Future Value (FV) Number of periods (N) Payment (PMT) 1 Rate 2 Type Present value (PV) The PV factors are included here for your convenience although you may not need to use them 5 No amounts should be typed in on this page. All amounts must be referenced from your "Data" worksheet. Please delete this text box. Declaration Rubric Data a. Payment Classification cessed d. Lessor Finant Circular References Type here to search o 2 Layo Permutan Dua View Help X Cathri 11 - 13 General - - AA a A- 2.99 BIU- $ - % Conditional Form formatting Table Style Delete- ma Apboard Font C > Parte: Prepare the statement of financial position for the lease for both the lessee and the lessor for 2 consecutive years Identify all balances reported on the statements, being clear of the classification. Assume both companies use a multi-step income statement For the lessor, use the "net" basis of presentation LESSEE Name of Company Partial Statement of Financial Position Date 2020 LESSOR Name of Company Partial Statement of Financial Position 2021 Date 2031 Endo. O Dat a. Payment b. Cassification d. Lesson Financial Statements Lessee Paste $ - % 9 4 Candid CH Forming to say Saut da Alignment Cri 641 X AM San Name of Company Partial income Statement Name of Company Parti come Statement Date Date 2020 2021 200 13 54 36 Bonus marks: (3 marks) Identify the balances reported on the statement of cash flows of the lessee company under the direct method 37 Identify in which section of the statement the items will be shown. Name of Company Partial Statement of Cash Flows Date 20.20 2021 44 . Data Payonet Classification les de Financial Statements indo rady Orfectes De- aA. 5 - % Conditional Format C Formatting Table - Styles A FS Chard Font Alignment un tang Any 22 A H Part 1: (6 marks) The leased asset has a fair value of $50,000 at the end of the lease. Prepare the journal entry (ies) required at the end of the lease and to record the return of the leased asset for the lessee. Bonus marks (3 marks): Prepare the journal entry (les) required at the end of the lease and to record the return of the leased asset to the lessor LESSONUS MARI JOURNAL ENTRIES Date Account LESSEE JOURNAL ENTRIES Date Account title Debid Credit 0-Jan 00 0-Jan-00 No amounts should be typed in on this page. All amounts must be referenced from your "Data" worksheet Please delete this text box. d. Lessor Financial Statements End of Lease b. Classification cessed NG