Commencement date January 1, 2025 Annual lease payment due at the beginning of each year, beginning...

 

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Commencement date January 1, 2025 Annual lease payment due at the beginning of each year, beginning with January 1, 2025 $56,957 Residual value of equipment at end of lease term, guaranteed by the lessee $40,000 Expected residual value of equipment at end of lease term Lease term Economic life of leased equipment $25,000 8 years 8 years Fair value of asset at January 1, 2025 $400,000 Lessor's implicit rate Lessee's incremental borrowing rate 6% 6% The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortiza- tion for all leased equipment. Instructions (Round all numbers to the nearest dollar.) a. Prepare an amortization schedule that would be suitable for the lessee for the lease term. b. Prepare all of the journal entries for the lessee for 2025 and 2026 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee's annual accounting period ends on December 31. c. Suppose Siskiwit received a lease incentive of $4,000 from Jupiter Leasing to enter the lease. How would the initial measurement of the lease liability and right-of-use asset be affected? What if Siskiwit prepaid rent of $16,000 to Jupiter? Commencement date January 1, 2025 Annual lease payment due at the beginning of each year, beginning with January 1, 2025 $56,957 Residual value of equipment at end of lease term, guaranteed by the lessee $40,000 Expected residual value of equipment at end of lease term Lease term Economic life of leased equipment $25,000 8 years 8 years Fair value of asset at January 1, 2025 $400,000 Lessor's implicit rate Lessee's incremental borrowing rate 6% 6% The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortiza- tion for all leased equipment. Instructions (Round all numbers to the nearest dollar.) a. Prepare an amortization schedule that would be suitable for the lessee for the lease term. b. Prepare all of the journal entries for the lessee for 2025 and 2026 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee's annual accounting period ends on December 31. c. Suppose Siskiwit received a lease incentive of $4,000 from Jupiter Leasing to enter the lease. How would the initial measurement of the lease liability and right-of-use asset be affected? What if Siskiwit prepaid rent of $16,000 to Jupiter?

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a Amortization Schedule Year Beginning Lease Interest Reduction in Ending Lease Payment Expense Leas... View the full answer