Question
The Harris Company is the lessee on a four-year lease with the following payments at the end of each year: Year 1: $ 20,000 Year
The Harris Company is the lessee on a four-year lease with the following payments at the end of each year:
Year 1: | $ | 20,000 |
Year 2: | $ | 25,000 |
Year 3: | $ | 30,000 |
Year 4: | $ | 35,000 |
An appropriate discount rate is 7 percentage, yielding a present value of $91,718. a-1. If the lease is an operating lease, what will be the initial value of the right-of-use asset? a-2. If the lease is an operating lease, what will be the initial value of the lease liability?
a-3. If the lease is an operating lease, what will be the lease expense shown on the income statement at the end of year 1? a-4. If the lease is an operating lease, what will be the interest expense shown on the income statement at the end of year 1?
a-5. If the lease is an operating lease, what will be the amortization expense shown on the income statement at the end of year 1?
b-1. If the lease is a finance lease, what will be the initial value of the right-of-use asset?
b-2. If the lease is a finance lease, what will be the initial value of the lease liability?
b-3. If the lease is a finance lease, what will be the lease expense shown on the income statement at the end of year 1?
b-4. If the lease is a finance lease, what will be the interest expense shown on the income statement at the end of year 1?
b-5. If the lease is a finance lease, what will be the amortization expense shown on the income statement at the end of year 1?
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