The following facts pertain to a non-cancellable lease agreement between Woodhouse Leasing Corporation and Vaughn Electronics Ltd., a lessee, for a computer system: Inception date October 1,2020 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at October 1, 2020 $150,280 Residual value at end of lease term 0 Lessor's implicit rate 8.0% Lessee's incremental borrowing rate 8.0% Annual lease payment due at the beginning of each year, beginning October 1, 2020 $30,100 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. Vaughn 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 nancing lease by the lessor. 4. What items and amounts will appear on the lessee's balance sheet at December 31, 2021? Vaughn Electronics Ltd. Balance Sheet - Partial $ $ $ $ Interest (8.0%) Reduction Balance of Annual on Unpaid of Lease Lease Lease Obligation/ Obligation/ Obligation/ Payment/ Net Net Net Date Receipt Investment Investment Investment 10/01/20 $ 150,280 10/01/20 $ 30,100 $ -0- $ 30,100 120,180 10/01/21 30,100 9,614 20,486 99.694 10/01/22 30,100 7,976 22,124 77,570 10/01/23 30,100 6,206 23,894 53,676 10/01/24 30,100 4.294 25,806 27,870 10/01/25 30,100 2,230 27,870 -0- $ 180,600 $ 30,320 $ 150,280Assuming that Vaughn Electronics' accounting period ends on September 30, answer the following questions with respect to this lease agreement. (Round answers to 0 decimal places. 2.3. 5,2 75.) 1. What items and amounts will appear on the lessee's income statement for the year ended September 30, 2021? Vaughn Electronics Ltd. Income Statement - Partial 2. What items and amounts will appear on the lessee's balance sheet at September 30,2021? Vaughn 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? Vaughn Electronics Ltd. Income Statement - Partial 4. What items and amounts will appear on the lessee's balance sheet at September 30, 2022? Vaughn Electronics Ltd. Balance Sheet - Partial Assuming that Vaughn Electronics' accounting period ends on December 31, answer the following questions with respect to this lease agreement. (Round answers to 0 decimal places. 3.3. 5,2 75.) 1. What items and amounts will appear on the lessee's income statement for the year ended December 31, 2020? Vaughn Electronics Ltd. Income Statement - Partial 2. What items and amounts will appear on the lessee's balance sheet at December 31. 2020? Vaughn 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? Vaughn Electronics Ltd. Income Statement - Partial
