Problem 21A-1 a-c The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Pina Company, a lessee. Commencement date Annual lease payment due at the beginning of January 1, 2017 $104,738 $54,000 each year, beginning with January 1, 2017 Residual value of equipment at end of lease term, guaranteed by the lessee Expected residual value of equipment at end of lease term Lease term Economic life of leased equipment Fair value of asset at January 1, 2017 Lessor's implicit rate Lessee's incremental borrowing rate $49,000 6 years 6 years $584,000 6% 6% The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment. Click here to view the factor table Your answer is partially correct. Try again. Prepare an amortization schedule that would be suitable for the lessee for the lease term. ( e.g. 5,275.) PINA COMPANY (Lessee) Lease Amortization Schedule Annual Lease Payment Plus GRV Interest on Liability Reduction of Lease Liability Date Lease Liability 0 0 545933 104,738 0 104,738 441195 104,738 26472 78266 362928 104,738 21776 82962 279966 1/1/20 104,738 16798 87940 192026 1/1/21 104,738 11522 93216 98809 1/1/22 104,738 5929 98908 12/31/22 628,428 82,495 545933 Your answer is partially correct. Try again. Prepare all of the journal entries for the lessee for 2017 and 2018 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee's annual accounting period ends on December 31. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places e.g. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit Jan. 1, 2017 Right-of-Use Asset 545933 545933 Lease Liability To record the lease.) Lease Liability 104,738 Cash 104,738 To record first lease payment) Dec. 31, 2017 Interest Expense 26472 Lease Liability (To record interest.) Amortization Expense 26472 90989 Accumulated Depreciation-Equipment 90989 (To record amortization.) Jan. 1, 2018 # |Lease Liability 26472 Interest Expense 26472 Interest Expense To reverse the December 31 entry.) Interest Expense 26472 26472 Lease Liability 78266 Cash 104,738 (To record the second lease payment.) Dec. 31, 2018 Interest Expense 21776 Lease Liability (To record interest.) Amortization Expense 21776 90989 Accumulated Depreciation-Equipment 90989 To record amortization) Your answer is incorrect. Try again. Suppose Pina received a lease incentive of $5,000 from Faldo Leasing to enter the lease. How would the initial measurement of the lease liability and right-of-use asset be affected? Right-of-use asset 540933 What if Pina prepaid rent of $5,000 to Faldo? Right-of-use asset 550933 Click if you would like to Show Work for this question: Sho
