Question
Problem 15-5 Capital lease; lessee; financial statement effects [LO15-5] Werner Chemical, Inc., leased a protein analyzer on September 30, 2016. The five-year lease agreement calls
Problem 15-5 Capital lease; lessee; financial statement effects [LO15-5]
| Werner Chemical, Inc., leased a protein analyzer on September 30, 2016. The five-year lease agreement calls for Werner to make quarterly lease payments of $349,131, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2016. Werner's incremental borrowing rate is 8%. Depreciation is recorded on a straight-line basis at the end of each fiscal year. The useful life of the equipment is five years. (FV of $1,PV of $1,FVA of $1,PVA of $1,FVAD of $1andPVAD of $1)(Use appropriate factor(s) from the tables provided.) |
| Required: |
| 1. | Determine the present value of the lease payments at September 30, 2016. |
| 2. | What amounts related to the lease would Werner report in its balance sheet at December 31, 2016 (ignore taxes)? |
| 3. | What amounts related to the lease would Werner report in its income statement for the year ended December 31, 2016 (ignore taxes)? |
| 4. | What amounts related to the lease would Werner report in its statement of cash flows for the year ended December 31, 2016 (ignore taxes)? |
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Essentials of Accounting for Governmental and Not-for-Profit Organizations
Authors: Paul A. Copley
10th Edition
007352705X, 978-0073527055
