Question
The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Flounder Company, a lessee. Commencement date January 1, Annual lease payment
The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Flounder Company, a lessee. Commencement date January 1, Annual lease payment due at the beginning of each year, beginning with January 1, $95,499 Residual value of equipment at end of lease term, guaranteed by the lessee $55,000 Expected residual value of equipment at end of lease term $50,000 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at January 1, $550,000 Lessors implicit rate 5 % Lessees incremental borrowing rate 5 % 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.
Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round present value factor calculations to 1.25124 and the final answers to O decimal places e.g. 5,275.) FLOUNDER COMPANY (Lessee) Lease Amortization Schedule Interest on Reduction of Lease Liability Liability Annual Lease Payment Plus GRV Lease Liability Date 1/1/20 1/1/20 95499 95499 1/1/21 95499 XXXPXPXPX 1/1/22 95499 1/1/23 95499 1/1/24 95499 1/1/25 95499 12/31/26 5000 577994 Prepare all of the journal entries for the lessee for and to record the lease agreement, the lease payments, and a annual accounting period ends on December 31. (Credit account titles are automatically indented when an is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to O the order presented in the problem.) Date Account Titles and Explanation Debit Credit * * (To record the lease.) (To record first lease payment.) (To record interest.) xWxE (To record second lease payment.) (To record interest.) (To record amortization.)
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