Assume the same information as in P20-8.

In problem 8

Inception date..............................................................................October 1, 2014

Lease term..............................................................................................6 years

Economic life of leased equipment..................................................................6 years

Fair value of asset at October 1, 2014............................................................$150,690

Residual value at end of lease term.....................................................................-0-

Lessor's implicit rate....................................................................................8.5%

Lessee's incremental borrowing rate..................................................................8.5%

Instructions

Answer the following questions, rounding all numbers to the nearest dollar.

(a) Assuming that Woodhouse Leasing Corporation's accounting period ends on September 30, answer the following questions with respect to this lease agreement.

1. What items and amounts will appear on the lessor's income statement for the year ending September 30, 2015?

2. What items and amounts will appear on the lessor's balance sheet at September 30, 2015?

3. What items and amounts will appear on the lessor's income statement for the year ending September 30, 2016?

4. What items and amounts will appear on the lessor's balance sheet at September 30, 2016?

(b) Assuming that Woodhouse Leasing Corporation's accounting period ends on December 31, answer the same questions as in part (a) above for the years ending December 31, 2014, and 2015.

(c) Discuss the differences, if any, in the classification of the lease to Woodhouse Leasing Corporation if the company were using IFRS in its financial reporting.