http://ezte 0.22578634404153475 1463277782423 2. A lease agreement that qualifie

Question

http://ezte 0.22578634404153475 1463277782423 2. A lease agreement that qualifies as a capital lease calls for annual lease payments of $24,000 over a four year lease term, with the first payment at January 1, the leases inception The interest rate is 5% 0 Si. Py ot S1. EVA ot S1. PVA ot $1. FVAD ot $1 and PVAD of $1) (Use appropriate factorfs) from the tables provided.) If lessee's fiscal year is the calendar year, what would be the amount of the lease liablity that the lessee would report in its balance sheet at the end of the first year? S 65,358 If Lessee's fiscal year is the calendar year, complete the amortization schedule for the first two payments. Lease Payment Interest Decrease in Outstanding Expense Period-End Balance Balance 01/01/2013 01/01/2013 D1/01/2014 85,103 65.358 44,626 19,745 24.000 s 24,000 4,255 S 19 3.26820,732 S24.000 S

Explanation / Answer

PRESENT VALUE OF ALL LEASE PAYMENT

= $24000 * PVIFA 5%, 4 PERIODS

= $24000 * 3.546

= $85104

AS LEASE PAYMENT IS IN ADVANCE I;E BEGINNING OF THE YEAR THE BALANCE LEASE LIBALITY AT THE END OF THE YEAR IS $61104 (I;E $85104 - $24000)

$20945

($24000 - $3055)

PERIOD END LEASE PAYMENT INTEREST EXPENSES DECEREASE IN BALANCE OUTSTANDING BALANCE 01/01/2013 $85104 01/01/2013 $24000 $0 $24000 $61104 01/01/2014 $24000 $3055 (ROUNDED)

$20945

($24000 - $3055)

$40159

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