INTERMEDIATE AccouNTING It(ACCT 316) udy & Practice Gradebook ORION Denlaadable

Question

INTERMEDIATE AccouNTING It(ACCT 316) udy & Practice Gradebook ORION Denlaadable elexthook en Assigaoment Erief Exercise 206 FRS 6, recently signed a lease for equipment from comer ud. The lease term is S years and require equal rintalonments d e.es at the beginning of eadh year. Th executory costs directly to third parties. The appropriate interest rate is 7%. e equipment has a fair value at the lease's inception of $124,900, an estimated useful ife of 5 years, and no residual value. Carta Vista pays all 12 20 Using tables, a financial calculator, or Excel functions, calculate the amount of the right-of-use agreement and the first payment under the lease. (Credit account titles are autosatically indented when the amount values to 5 decioial places,e.g. 1.25124 and final answers to 0 decimal i liability and prepare the initial entry to roflect the signing of tha kase is entered. Do not indent manually. Round factor asset and lease I pleces, e.a. 5,a75.) Stu Acount Titles and Explanation Debit Credit Question Attempts: 0 of 3 used SA FOR LATEXIa oeN @8a RA118-43-23 re to search

Explanation / Answer

Date Lease Receivable / Liability Interest Receivable / Payable Annual lease Receipt / Payment Reduction in Lease Asset / Liability Jan.1, Year 1 124900 0 28469 28469 Dec.31,Year 1 96431 6750 28469 21719 Dec.31,Year 2 74712 5230 28469 23239 Dec.31,Year 3 51473 3603 28469 24866 Dec.31,Year 4 26607 1861 28469 26608 T o t a l 17445 142345 124900 Present value of the lease payments: A (1-(1/1+r)^n)/r) x (1+r) Where A = the lease payment, r is the rate of interest and n is the number of periods. 28469 x (1-(1/(1.07)^5)/0.07) x (1.07) 28469 x ((1-0.7130)/0.07) x 1.07 28469 x (4.1002)x1.07 124900.00 In the books of Carla Vista Ltd. (Lessee) Date Account Title Debit Credit Jan.1. Year1 Right-of-use asset 124900 Lease Liability 124900 (For the lease agreement) Jan.1. Year1 Lease Liability 28469 Cash 28469 (For the first lease payment)

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