Module $7$ Summary

Suppose you just entered into a three$-$year finance lease and agree to pay $$50,000$ at the end of each year. The discount rate is $1\%.$ You amortize the ROU asset on a straight$-$line basis over the lease term.

Please fill in ROU Asset and Lease Liability in the spreadsheet below. Again, assuming there is no tax and gross profit at a constant $$500,\frac{000}{?}$ year.

HINT: Try to answer with spreadsheet formulas to avoid rounding errors.

fx $3$

$\backslash$table$[[,$A$,$B$,$C$,$D$,$E$,$F$,$G$],[1,\backslash$table$[[$IFRS Lease $/],[$US GAAP Finance Lease$]],,$Year $1,$Year $2,$Year $3.,,],[2,($in $ thousands$),,,,,,],[3,$Lease Payments,,$50,50,50,,],[4,,,,,,,],[5,$Balance Sheet,$4,,,,,],[6,$Assets,$5,,,,,],[7,$Cash,$0,450,900,1,350,,],[8,$Right$-$of$-$Use Asset, Net,$147,49,49,49,,],[9,$Total,$147,499,949,1,399,5,],[10,4,,,,,,],[11,$Liabilities and Equity,,,,,,$],[12,$Lease Liability$*,147,3,3[,3,,],[13,$Retained Earnings,$0,450,900,\frac{?}{\text{b}\text{a}\text{r}}(1,351{)}^6,,],[14,$Total,$147,453,903,1,354,,],[15,,,,,,,],[16,,,,$M$,,,],[17,$Income Statement,,,,,,$],[18,$Gross Profit,,$500,500,500,,],[19,$Lease Expense,,$0,0,0,,],[20,$EBITDA,,$500,500,500,,]]$