Problem 6. Following are the terms of a lease entered into on January 1, 2020. [LC, implicit unknown] FMV of asset at inception of lease $500,000.00 Estimated residual value of asset at lease termination $80,000.00 Portion of residual value guaranteed by Lessee $50,000.00 Lessor's amortized cost of asset at inception of lease $500,000.00 Duration of lease 2 yrs Lease payment amount $230,458.00 Frequency of payments annually First payment due at inception of lease? Yes Purchase option that Lessee is reasonably certain to exercise? No Title transfers to Lessee at any time during or at end of lease? No Lessor's implicit rate 12% Lessee's incremental borrowing rate 10% Does Lessee know Lessor's implicit rate? Remaining economic life of asset 5 yrs Economic life of asset when new 5 yrs Specialized use asset with no alternative use to Lessor at end of lease? no Nonlease components included in lease payment? Initial direct costs incurred by Lessor (assume recorded by Lessor in Misc. Expenses when incurred) none Initial direct costs incurred by Lessee (assume recorded by Lessor in Misc. Expenses when incurred) none Lessor's fiscal year end 12/31 Lessee's fiscal year end 12/31 Required 1. For the following lease, prepare amortization schedule and lease-related entries booked by Lessor and Lessee over the entire lease term. no no Complete the amortization schedule by entering the appropriate values in the green boxes Lessee amortization schedule date pmt interest principal balance 1/1/2020 1/1/2020 12/31/2020 $230,458 $230,458 Lessor amortization schedule date interest principal balance pmt 1/1/2020 1/1/2020 $230,458.00 12/31/2020 $230,458.00 12/31/2021 Enter your entries below. Choose the account from the drop-down list in the yellow cell. Enter the amount of the entry in the green box. Entries by Lessee at inception of lease on 1/1/2020: Account Debit Credit 1 1 1 1 Entries by Lessor at inception of lease on 1/1/2020: Account Debit Credit 2 2 2 2 Entries by Lessee at 12/31/2020: Account Debit Credit 3 3 3 3 3 Entries by Lessor at 12/31/2020: Account Debit Credit 4 4 4 Entries by Lessor at 12/31/2021: Account Debit Credit 5 5 5 5 Entries by Lessee at 12/31/2021: Account Debit Credit O O Column1 Accumulated depreciation (Bal. Sht) Cash (Bal. Sht) Deferred rent revenue (Bal. Sht) Equipment (Elal. Sht) Lease payable (Bal. Sht) Lease receivable (Bal. Sht) Note payable (Bal. Sht) Prepaid service contract (Bal. Sht) Right-of-Use asset (Bal. Sht) Warehouse (Bal. Sht) Amortization expense (Inc. Stmt) Cost of goods sold (Inc. Stmt) Gain on sale pf warehouse (Inc. Stmt) Interest expense (Inc. Stmt) Interest revenue (Inc. Stmt) Lease expense (Inc. Stmt) Lease revenue (Inc. Stmt) Misc. expenses (Inc. Stmt) Rent revenue (Inc. Stmt) Sales revenue (Inc. Stmt)
