Finance Lease – (Calculator set on BEG). On January 1^st, 2020 Asphalt Paving Co leased a road-paving machine from Construction Leasing Co. for 5 years. Payments under the lease were $170,951.42, with the first due upon signing of the lease on January 1, 2020, and the remainder due on December 31, 2020 and the following 3 years. The equipment had a sales price of $750,000 and an estimated useful life of 6 years. The interest rate implicit in the lease is 7%.

• Calculate the present value of future lease payments
• Why does this arrangement qualify as a Finance lease?
• Prepare the first three lines of the amortization table that would be used by Asphalt Paving
• Record all journal entries related to this lease for Asphalt Paving for 2020 (Remember that their is a payment both at the beginning and end of the year)

Answer rating: 100% (QA)

Present value of lease payment 17095142 PVAF due 7 5 years1709514243872 749998 Lease is finance lea... View the full answer