TABLE 19-1 Financial Reporting for Leases Part 1: Preliminary Calculations Lease liability balance Imputed interest expense...
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TABLE 19-1 Financial Reporting for Leases Part 1: Preliminary Calculations Lease liability balance" Imputed interest expense Lease payment Year 0 $26,730 Year 1 $18,334 $ 1,604 $10,000 Year 2 $ 9,434 $ 1,100 $10,000 Year 3 $ 0 $ 566 $10,000 Part 2: Reporting an Operating Lease Lease liability balance Right-of-use asset balance Lease expensed Year 0 $26,730 $26,730 $18,334 $10,000 Year 1 $18,334 Year 2 $ 9,434 $ 9,434 $10,000 Year 3 $ 0 $ 0 $10,000 Part 3: Reporting a Finance Lease Year 0 Lease liability balance $26,730 Year 1 $18,334 Year 2 $9,434 Year 3 $ 0 Right-of-use asset balance $26,730 $ 17,820 $ 8,910 $ 0 Interest expense $ 1,604 $ 1,100 $ 566 Amortization expense $ 8,910 $ 8,910 $8,910 Total lease expense $10,514 $10,010 $9,476 Source: See the file Ch19 Tool Kit.xlsx. Numbers in the table are shown as rounded values for clarity in reporting. However, unrounded values are used for all calculations. Notes: "The lease liability in Year 0 is equal to the initial lease liability. For subsequent years, the lease liability balance is equal to the previous balance plus the imputed interest minus the lease payment. *The imputed interest for the end of Year t is equal to the cost of debt (r.) multiplied by the lease liability payment at the beginning of Year t. The right-of-use asset balance for an operating lease is equal to the lease liability balance. "The lease expense for an operating lease is equal to the lease payment. *The right-of-use balance for a finance lease is equal to the previous balance minus the amortization charge. 'The interest expense for a finance lease is equal to the imputed interest. *The amortization charge for a finance lease is equal to initial right-of-use asset divided by the number of years of the lease. TABLE 19-1 Financial Reporting for Leases Part 1: Preliminary Calculations Lease liability balance" Imputed interest expense Lease payment Year 0 $26,730 Year 1 $18,334 $ 1,604 $10,000 Year 2 $ 9,434 $ 1,100 $10,000 Year 3 $ 0 $ 566 $10,000 Part 2: Reporting an Operating Lease Lease liability balance Right-of-use asset balance Lease expensed Year 0 $26,730 $26,730 $18,334 $10,000 Year 1 $18,334 Year 2 $ 9,434 $ 9,434 $10,000 Year 3 $ 0 $ 0 $10,000 Part 3: Reporting a Finance Lease Year 0 Lease liability balance $26,730 Year 1 $18,334 Year 2 $9,434 Year 3 $ 0 Right-of-use asset balance $26,730 $ 17,820 $ 8,910 $ 0 Interest expense $ 1,604 $ 1,100 $ 566 Amortization expense $ 8,910 $ 8,910 $8,910 Total lease expense $10,514 $10,010 $9,476 Source: See the file Ch19 Tool Kit.xlsx. Numbers in the table are shown as rounded values for clarity in reporting. However, unrounded values are used for all calculations. Notes: "The lease liability in Year 0 is equal to the initial lease liability. For subsequent years, the lease liability balance is equal to the previous balance plus the imputed interest minus the lease payment. *The imputed interest for the end of Year t is equal to the cost of debt (r.) multiplied by the lease liability payment at the beginning of Year t. The right-of-use asset balance for an operating lease is equal to the lease liability balance. "The lease expense for an operating lease is equal to the lease payment. *The right-of-use balance for a finance lease is equal to the previous balance minus the amortization charge. 'The interest expense for a finance lease is equal to the imputed interest. *The amortization charge for a finance lease is equal to initial right-of-use asset divided by the number of years of the lease.
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