Werner Chemical, Inc., leased a protein analyzer on September 30, 2021. The five-year lease agreement calls for

Question:

Werner Chemical, Inc., leased a protein analyzer on September 30, 2021. The five-year lease agreement calls for Werner to make quarterly lease payments of $391,548, payable each September 30, December 31, March 31, and June 30, with the first payment at September 30, 2021. Werner’s incremental borrowing rate is 12%. Amortization is recorded on a straight-line basis at the end of each fiscal year. The useful life of the equipment is five years.

Required:
1. Determine the present value of the lease payments at September 30, 2021 (to the nearest $000).
2. What pretax amounts related to the lease would Werner report in its balance sheet at December 31, 2021?
3. What pretax amounts related to the lease would Werner report in its income statement for the year ended December 31, 2021?
4. What pretax amounts related to the lease would Werner report in its statement of cash flows for the year ended December 31, 2021?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...

Fantastic news! We've Found the answer you've been seeking!