On January 1, 2019, Carey Inc. entered into a noncancelable lease agreement, agreeing to pay $4,000 at the end of each year for 3 years to acquire a new computer system having a market value of $9,950. The expected useful life of the computer system is also 3 years, and the computer will be depreciated on a straight-line basis with no salvage value. The interest rate used by the lessor to determine the annual payments was 10%. Under the terms of the lease, Carey has an option to purchase the computer for $1 on January 1, 2023. See Table 6-5. (Use the appropriate factor by clicking on the Table link.) Required: a. Should Carey Inc. account for this lease as a financing lease or an operating lease? b. Prepare the horizontal model and record the journal entry that Carey Inc. should make on January 1, 2019. (Hint: First determine the present value of future lease payments.) c. Prepare the horizontal model and record the journal entry that Carey Inc. should make on December 31, 2019, to record the first annual lease payment of $4,000. (Hint. Based on your answer to part b, determine the appropriate amounts for interest and principal.) Indicate the financial statement effect. d. What expenses (include amounts) should be recognized for this lease on the income statement for the year ended December 31, 2019? e. The accounting for an asset acquired under a capital lease Complete this question by entering your answers in the tabs below. Required A Required 81 Required 82 Required C1 Required C2 Required D Required E Check my work Prepare the horizontal model that Carey Inc. should make on January 1, 2019. (Hint: First determine the present value of future lease payments.) (Use amounts with fa calculations. Round your final answers to the nearest whole dollar amount.) Assets Balance Sheet Liabilities Stockholders' Equity Net Income + Income Statement Revenues te this question by entering your answers in the tabs below. Required A Required B1 Required B2 Required C1 Required C2 Required D Required E Record the journal entry that Carey Inc. should make on January 1, 2019. (Hint: First determine the present value of future lease payments.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round up your answer to the nearest ten dollars. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) View transaction list Journal entry worksheet < 1 Record the capital lease transaction at the present value of future lease payments. Note: Enter debits before credits. Event 1 General Journal Debit Credit View general journal Help On January 1, 2019, Carey Inc. entered into a noncancelable lease agreement, agreeing to pay $4,000 at the end of each year for 3 years to acquire a new computer system having a market value of $9,950. The expected useful life of the computer system is also 3 years, and the computer will be depreciated on a straight-line basis with no salvage value. The interest rate used by the lessor to determine the annual payments was 10%. Under the terms of the lease, Carey has an option to purchase the computer for $1 on January 1, 2023. See Table 6-5. (Use the appropriate factor by clicking on the Table link.) Required: a. Should Carey Inc. account for this lease as a financing lease or an operating lease? b. Prepare the horizontal model and record the journal entry that Carey Inc. should make on January 1, 2019. (Hint First determine the present value of future lease payments.) c. Prepare the horizontal model and record the journal entry that Carey Inc. should make on December 31, 2019, to record the first annual lease payment of $4,000. (Hint: Based on your answer to part b, determine the appropriate amounts for interest and principal) Indicate the financial statement effect. d. What expenses (include amounts) should be recognized for this lease on the income statement for the year ended December 31, 2019? e. The accounting for an asset acquired under a capital lease Complete this question by entering your answers in the tabs below. Required A Required B1 Required 82 Required C1 Required C2 Required D Required E Save & Call Submit Check my work Prepare the horizontal model that Carey Inc. should make on December 31, 2019, to record the first annual lease payment of $4,000. (Hint: Based on your answer to pan statement effect. (Enter decreases with a minus sign to indicate a negative financial statement effect. Do not round intermediate calculations, Round your final answers to Assets Balance Sheet Liabilities Stockholders' Equity Net Income Income Statement Revenues > By entering your answers in the tabs below. Required A Required B1 Required B2 Required C1 Required C2 Required D Required E Record the journal entry that Carey Inc. should make on December 31, 2019, to record the first annual lease payment of $4,000. (Hint: Based on your answer to part b, determine the appropriate amounts for interest and principal.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) View transaction list Journal entry worksheet < 1 Record the first annual lease payment on capital lease. Note: Enter debits before credits. Event 1 General Journal Debit Credit View general journal Clear entry On January 1, 2019, Carey Inc. entered into a noncancelable lease agreement, agreeing to pay $4,000 at the end of each year for 3 years to acquire a new computer system having a market value of $9,950. The expected useful life of the computer system is also 3. years, and the computer will be depreciated on a straight-line basis with no salvage value. The interest rate used by the lessor to determine the annual payments was 10%. Under the terms of the lease, Carey has an option to purchase the computer for $1 on January 1, 2023. See Table 6-5. (Use the appropriate factor by clicking on the Table link.) Required: a. Should Carey Inc. account for this lease as a financing lease or an operating lease? b. Prepare the horizontal model and record the journal entry that Carey Inc. should make on January 1, 2019. (Hint. First determine the present value of future lease payments.) c. Prepare the horizontal model and record the journal entry that Carey Inc. should make on December 31, 2019, to record the first annual lease payment of $4,000. (Hint Based on your answer to part b, determine the appropriate amounts for interest and principal.) Indicate the financial statement effect. d. What expenses (include amounts) should be recognized for this lease on the income statement for the year ended December 31, 2019? e. The accounting for an asset acquired under a capital lease Complete this question by entering your answers in the tabs below. Required A Required B1 Required B2 Required C1 Required C2 Required D Required E What expenses (include amounts) should be recognized for this lease on the income statement for the year ended December 31, 2019? (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) Income statement (Partial) 5 On January 1, 2019, Carey Inc. entered into a noncancelable lease agreement, agreeing to pay $4,000 at the end of each year for 3 years to acquire a new computer system having a market value of $9,950. The expected useful life of the computer system is also 3 years, and the computer will be depreciated on a straight-line basis with no salvage value. The interest rate used by the lessor to determine the annual payments was 10%. Under the terms of the lease, Carey has an option to purchase the computer for $1 on January 1, 2023. See Table 6-5. (Use the appropriate factor by clicking on the Table link.) Required: a. Should Carey Inc. account for this lease as a financing lease or an operating lease? b. Prepare the horizontal model and record the journal entry that Carey Inc. should make on January 1, 2019. (Hint First determine the present value of future lease payments.) c. Prepare the horizontal model and record the journal entry that Carey Inc. should make on December 31, 2019, to record the first annual lease payment of $4,000. (Hint Based on your answer to part b, determine the appropriate amounts for interest and principal.) Indicate the financial statement effect. d. What expenses (include amounts) should be recognized for this lease on the income statement for the year ended December 31, 2019? e. The accounting for an asset acquired under a capital lease Complete this question by entering your answers in the tabs below. Required A Required B1 Required B2 Required C1 Required C2 Required D Required E The accounting for an asset acquired under a capital lease Oisn't really any different than the accounting for an asset that was purchased with money borrowed on a long-term loan because the firm has aquired virtually all of the rights and benefits of ownership. Ois entirely different than the accounting for an asset that was purchased with money borrowed on a long-term loan because the firm has not aquired the rights and benefits of ownership