The Harris Company is the lessee on a four-year lease with the following payments at the end
Question:
The Harris Company is the lessee on a four-year lease with the following payments at the end of each year:
Year 1: | ps | 14,000 |
Year 2: | ps | 19,000 |
Year 3: | ps | 24,000 |
Year 4: | ps | 29,000 |
An appropriate discount rate is 7 percent, giving a present value of $71,395.
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? (Do not leave cells blank; be sure to enter "0" where necessary.)
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? (Round your answer to the nearest dollar amount.)
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? (Round your answer to the nearest dollar amount.)
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen