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The following facts pertain to a non-cancellable lease agreement between Woodhouse Leasing Corporation and Sheridan Electronics Ltd., a lessee, for a computer system: Inception date
The following facts pertain to a non-cancellable lease agreement between Woodhouse Leasing Corporation and Sheridan Electronics Ltd., a lessee, for a computer system: Inception date Lease term Economic life of leased equipment Fair value of asset at October 1, 2020 Residual value at end of lease term Lessor's implicit rate Lessee's incremental borrowing rate Annual lease payment due at the beginning of each year, beginning October 1, 2020 October 1, 2020 6 years 6 years $151,779 -0- 8.0% 8.0% $30,400 The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties about costs that have not yet been incurred by the lessor. Sheridan Electronics Ltd., the lessee, assumes responsibility for all repairs and maintenance costs, which amount to $2,500 per year and are to be paid each October 1, beginning October 1, 2020, by the lessee directly to the suppliers. The asset will revert to the lessor at the end of the lease term. The straight-line depreciation method is used for all equipment. The following amortization schedule for the lease obligation has been prepared correctly for use by both the lessor and the lessee in accounting for this lease using ASPE. The lease is accounted for properly as a capital lease by the lessee and as a direct financing lease by the lessor. Date Annual Lease Payment/ Receipt Interest (8.0%) on Unpaid Obligation/ Net Investment 10/01/20 Reduction of Lease Obligation/ Net Investment Balance of Lease Obligation/ Net Investment $ 151,779 10/01/20 $ 30,400 $ -0- $ 30,400 121,379 10/01/21 30,400 9,710 20,690 100,689 10/01/22 30,400 8,055 22,345 78,344 10/01/23 30,400 6,268 24,132 54,211 10/01/24 30,400 4,337 26,063 28,148 10/01/25 30,400 2,252 28,148 -0- $ 182,400 $ 30,622 $ 151,778 Assuming that Sheridan Electronics' accounting period ends on September 30, answer the following questions with respect to this lease agreement. (Round answers to O decimal places, e.g. 5,275.) 1. What items and amounts will appear on the lessee's income statement for the year ended September 30, 2021? Sheridan Electronics Ltd. Income Statement - Partial 2. What items and amounts will appear on the lessee's balance sheet at September 30, 2021? Sheridan Electronics Ltd. Balance Sheet - Partial $ $ $ 3. What items and amounts will appear on the lessee's income statement for the year ended September 30, 2022? Sheridan Electronics Ltd. Income Statement - Partial $ 4. What items and amounts will appear on the lessee's balance sheet at September 30, 2022? Sheridan Electronics Ltd. Balance Sheet - Partial eTextbook and Media List of Accounts $ $ Assuming that Sheridan Electronics' accounting period ends on December 31, answer the following questions with respect to this lease agreement. (Round answers to 0 decimal places, e.g. 5,275.) 1. What items and amounts will appear on the lessee's income statement for the year ended December 31, 2020? Sheridan Electronics Ltd. Income Statement - Partial 2. What items and amounts will appear on the lessee's balance sheet at December 31, 2020? Sheridan Electronics Ltd. Balance Sheet - Partial $ $ 3. What items and amounts will appear on the lessee's income statement for the year ended December 31, 2021? Sheridan Electronics Ltd. Income Statement - Partial $ 4. What items and amounts will appear on the lessee's balance sheet at December 31, 2021? Sheridan Electronics Ltd. Balance Sheet - Partial $
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