Davidson, Incorporated leased a machine from Barwick Corporation. Barwick completed construction of the machine on January...

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Davidson, Incorporated leased a machine from Barwick Corporation. Barwick completed construction of the machine on January 1, 2023. The lease agreement for the $6,000,000 (fair value and present value of the lease payments) machine specified 4 equal payments at the end of each year. The useful life of the machine was expected to be 4 years with no residual value. Barwick's implicit interest rate was 9%. Lease date Fair value and present value of lease payments Lease term Useful life of machine Residual value Barwick's implicit interest rate 1. Determine the amount of each lease payment using Excel's PMT function January 1, 2023 $6,000,000 4 years 4 years $0 9% 2. Prepare the journal entry for Davidson, Incorporated at the beginning of the lease on January 1, 2023. General Journal Date January 1, 2023 Debit Credit 3. Prepare an amortization schedule for the 4-year term of the lease. Date Lease Payments Effective Interest Decrease in Outstanding Balance Balance January 1, 2023 December 31, 2023 December 31, 2024 0 December 31, 2025 0 December 31, 2026 0 Totals 4. Record the first lease payment on December 31, 2023. Date December 31, 2023 General Journal Debit Credit 5. Record the amortization of right-of-use asset on December 31, 2023. Date December 31, 2023 General Journal Debit Credit 6. Indicate the amounts related to the lease reported on the year-end balance sheets and income statements. Date Balance Sheet Amounts Right-of-Use Lease Liability Asset Income Statement Amounts Interest Expense Amortization Expense December 31, 2023 December 31, 2024 December 31, 2025 December 31, 2026 0 Davidson, Incorporated leased a machine from Barwick Corporation. Barwick completed construction of the machine on January 1, 2023. The lease agreement for the $6,000,000 (fair value and present value of the lease payments) machine specified 4 equal payments at the end of each year. The useful life of the machine was expected to be 4 years with no residual value. Barwick's implicit interest rate was 9%. Lease date Fair value and present value of lease payments Lease term Useful life of machine Residual value Barwick's implicit interest rate 1. Determine the amount of each lease payment using Excel's PMT function January 1, 2023 $6,000,000 4 years 4 years $0 9% 2. Prepare the journal entry for Davidson, Incorporated at the beginning of the lease on January 1, 2023. General Journal Date January 1, 2023 Debit Credit 3. Prepare an amortization schedule for the 4-year term of the lease. Date Lease Payments Effective Interest Decrease in Outstanding Balance Balance January 1, 2023 December 31, 2023 December 31, 2024 0 December 31, 2025 0 December 31, 2026 0 Totals 4. Record the first lease payment on December 31, 2023. Date December 31, 2023 General Journal Debit Credit 5. Record the amortization of right-of-use asset on December 31, 2023. Date December 31, 2023 General Journal Debit Credit 6. Indicate the amounts related to the lease reported on the year-end balance sheets and income statements. Date Balance Sheet Amounts Right-of-Use Lease Liability Asset Income Statement Amounts Interest Expense Amortization Expense December 31, 2023 December 31, 2024 December 31, 2025 December 31, 2026 0

Answer rating: 100% (QA)

Answer 1 To determine the amount of each lease payment using Excels PMT function follow these steps ... View the full answer