Reporting Finance Lease, Guaranteed Residual-Lessee Mac Leasing Company (lessor) and Ash Corporation (lessee) signed a four-year lease on January 1, 2020. The underlying asset has an estimated life of six years, and the property reverts to Mac at the end of the lease term. Lease payments of $34,577 are payable on January 1 of each year and were set to yield Mac a return of 8%, which was known to Ash. The estimated residual value at the end of the lease term is $29,000 and is guaranteed by Ash Corporation. Ash expects the estimated residual value at the end of the lease term to be $29,000. The lease contains no purchase option. b. Prepare an amortization schedule of the lease liability. Note: Round each amount in the schedule to the nearest whole dollar Lease Payment Interest Reduction of on Liability Lease Liability Lease Liability $ Date Jan. 1, 2020 Jan. 1, 2020 Jan. 1, 2021 Jan. 1, 2022 Jan. 1, 2023 Total c. Prepare the entries for Ash Company for 2020. Note: Round your answers to the nearest whole dollar. Date Account Name Dr. Jan. 1, 2020 Cr. To record lease liability and right-of-use asset Jan. 1, 2020 To record lease payment Dec. 31, 2020 To record interest Dec 31, 2020 To record amortization d. Let's now assume that Ash Corporation expects the estimated residual value at the end of the lease term to be $10,150 instead. Prepare the entries for Ash Corporation for 2020. Note: Round your answers to the nearest whole dollar. Date Account Name Dr. Jan. 1, 2020 To record lease liability and right-of-use asset Jan. 1, 2020 To record lease payment Dec 31, 2020 To record interest Dec 31, 2020 To record amortization Reporting Finance Lease, Guaranteed Residual-Lessee Mac Leasing Company (lessor) and Ash Corporation (lessee) signed a four-year lease on January 1, 2020. The underlying asset has an estimated life of six years, and the property reverts to Mac at the end of the lease term. Lease payments of $34,577 are payable on January 1 of each year and were set to yield Mac a return of 8%, which was known to Ash. The estimated residual value at the end of the lease term is $29,000 and is guaranteed by Ash Corporation. Ash expects the estimated residual value at the end of the lease term to be $29,000. The lease contains no purchase option. b. Prepare an amortization schedule of the lease liability. Note: Round each amount in the schedule to the nearest whole dollar Lease Payment Interest Reduction of on Liability Lease Liability Lease Liability $ Date Jan. 1, 2020 Jan. 1, 2020 Jan. 1, 2021 Jan. 1, 2022 Jan. 1, 2023 Total c. Prepare the entries for Ash Company for 2020. Note: Round your answers to the nearest whole dollar. Date Account Name Dr. Jan. 1, 2020 Cr. To record lease liability and right-of-use asset Jan. 1, 2020 To record lease payment Dec. 31, 2020 To record interest Dec 31, 2020 To record amortization d. Let's now assume that Ash Corporation expects the estimated residual value at the end of the lease term to be $10,150 instead. Prepare the entries for Ash Corporation for 2020. Note: Round your answers to the nearest whole dollar. Date Account Name Dr. Jan. 1, 2020 To record lease liability and right-of-use asset Jan. 1, 2020 To record lease payment Dec 31, 2020 To record interest Dec 31, 2020 To record amortization
