Question 5 Wildhorse Corp., which uses IFRS, signs non-renewable, non-cancellable lease agreement to lease robotic equipment from Xiu Inc. The following information concerns the lease agreement. Inception date January 1, 2020 Lease term 5 years Fair value of equipment Jan. 1, 2020 $280,000 Economic life of leased equipment 7 years Annual rental payments starting Jan. 1, 2020 $48,505 Option to purchase at the end of the term none Depreciation method Straight-line Residual value none Wildhorse's incremental borrowing rate 7% Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. Your answer is correct. Using (1) factor tables, (2) a financial calculator, or (3) Excel functions, calculate the amount of the right-of-use asset and lease liability. (Round factor values to 5 decimal places, e.g. 1.25124 and fina answers to o decimal places, e.g. 5,275.) The amount of the right-of-use asset 212,802 Prepare the initial entry to reflect the signing of the lease agreement. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select 'No entry" for the account titles and enter o for the amounts.) Using (1) factor tables, (2) a financial calculator, or (3) Excel functions, calculate the amount of the right-of-use asset and lease liability. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275.) The amount of the night-of-use asset 212,802 Prepare the initial entry to reflect the signing of the lease agreement. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry for the account titles and enter o for the amounts.) Date Account Tities and Explanation Debit Credit Jan. 1, 2020 Right-of-Use Asset 212802 Lease Liability 164297 Cash 48505 SHOW LIST OF ACCOUNTS SHOW SOLUTION Your answer is correct. Prepare an amortization schedule for the term of the lease to be used by Wildhorse. Use Excel. (Round answers to o decimal places, e.g. 5,275.) Wildhorse Corp. Lease Amortization Schedule (Lessee) Interest on Unpaid Liability Date Annual Payment Reduction of Lease Liability Balance of Lease Liability 212802 January 1, 2020 48505 148505 164297 January 1, 2021 48505 11501 37004 127292 January 1, 2022 48505 8910 39595 87698 January 1, 2023 48505 6139 42366 45632 January 1, 2024 48505 3173 145332 0 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Prepare the journal entries on Wildhorse Corp.'s books to record the payments related to this lease for the years 2020 and 2021 as well as any adjusting journal entries at its fiscal year ends of December 31, 2020 and 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Date Account Titles and Explanation Debit Credit v Dec. 31, 2020 V Depreciation Expense 42560 Accumulated Depreciat (To record depreciation) 42560 Dec 31, 2020 Interest Expense 11,501 Lease Liability (To record interest) 11,501 Dec. 31, 2021 v Amortization Expense 42560 Right-of-Use Asset 42560 Dec 31, 2021 Interest Expense 8910 Lease Liability 8910 (To record depreciation) Dec. 31 2021 [interest Expense 8910 Lease Liability (To record interest) 8910 SHOW LIST OF ACCOUNTS