Stobbins Inc leased a machine from Early Leasing Company on 1/1/Yearl. It is a 6-year lease term. Stobbins pays 5,000 annually for use of the machine. The first payment is on 12/31/Yeart and the payments thereafter are on 12/31 of each year. In other words, lease payments are an ordinary annuity.) Early paid $23,114 for the machine and the implicit interest rate in the lease is 8%. The machine has an estimated useful life of 6 years. 11. Is this an operating lease or a financing lease? Check your answer in the quiz linked in this folder called "Lease Question B check. Use the correct classification for the remaining questions 12. Complete the amortization schedule Stobbins would prepare for this Lease Payable. 13. Related to this lease, how will Stobbins report as each of the following on the income statement for Year1? Hint: consider your answer to Question 11 as we have different reporting for the 2 types of leases. If the account title is not used on the income statement for this type of lease, answer N/A. You will have at least one N/A a. Lease or rent expense b. Interest expense C Amortization expense 14. What will the lessee (Stobbins) report on the 12/31/Yearl balance sheet as a right-of-use asset? Show any math to arrive at your final answer 15. What amount will Stobbins report as Lease Payable on the balance sheet as of 12/31/Year1? 16. What amount will the lessor (Early) report as revenue related to this lease for Yeari. QUESTIONS C and D are provided in the TAX QUESTIONS ASSIGNMENT. Stobbins Inc leased a machine from Early Leasing Company on 1/1/Yearl. It is a 6-year lease term. Stobbins pays 5,000 annually for use of the machine. The first payment is on 12/31/Yeart and the payments thereafter are on 12/31 of each year. In other words, lease payments are an ordinary annuity.) Early paid $23,114 for the machine and the implicit interest rate in the lease is 8%. The machine has an estimated useful life of 6 years. 11. Is this an operating lease or a financing lease? Check your answer in the quiz linked in this folder called "Lease Question B check. Use the correct classification for the remaining questions 12. Complete the amortization schedule Stobbins would prepare for this Lease Payable. 13. Related to this lease, how will Stobbins report as each of the following on the income statement for Year1? Hint: consider your answer to Question 11 as we have different reporting for the 2 types of leases. If the account title is not used on the income statement for this type of lease, answer N/A. You will have at least one N/A a. Lease or rent expense b. Interest expense C Amortization expense 14. What will the lessee (Stobbins) report on the 12/31/Yearl balance sheet as a right-of-use asset? Show any math to arrive at your final answer 15. What amount will Stobbins report as Lease Payable on the balance sheet as of 12/31/Year1? 16. What amount will the lessor (Early) report as revenue related to this lease for Yeari. QUESTIONS C and D are provided in the TAX QUESTIONS ASSIGNMENT
