On July 1, 2022, City of Rosebud entered into a lease agreement for its education department to
Question:
On July 1, 2022, City of Rosebud entered into a lease agreement for its education department to use office space for a period of 5 years. Under the terms of the lease, Tiktoken will make annual payments of $60,000 on July 1st of each year with the first payment due at the lease signing. which includes interest at a rate of 4.5% APR. Rosebud will not obtain ownership of the warehouse.
a) Determine the value of the lease at its inception using either a financial calculator OR Excel. Provide the financial calculator inputs OR the Excel formula to support your answer.
Value of the Lease at its Inception |
Financial Calculator:
N | I/Y | PV | PMT | FV | MODE |
Excel Formula:
b) On July 1, 2021, the City of Rosebud recognized the lease agreement. (4 points)
Recorded in: | GOVERNMENT-WIDE F/S | |||||||
Date | Account Names | Debit | Credit | Date | Account Names | Debit | Credit |
c) On July 1, 2021, the City of Rosebud made the first lease payment of $60,000.
Recorded in: | GOVERNMENT-WIDE F/S | |||||||
Date | Account Names | Debit | Credit | Date | Account Names | Debit | Credit |
2. Complete the following lease liability amortization schedule for the first two lease payments.
Month | Interest Expense | Cash Paid for Interest | Premium Amortization | Carrying Value of Bonds |
7/1/2021 | ||||
7/1/2021 | ||||
7/1/2022 Calculations | ||||
Amounts |
3. On June 30, 2022, the City of Rosebud made the required adjusting entries for interest on the lease and the amortization of the intangible asset.
Recorded in: | GOVERNMENT-WIDE F/S | |||||||
Date | Account Names | Debit | Credit | Date | Account Names | Debit | Credit |
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella