Q1.On December 31, 2019, Venus Corp. (the lessee) leases equipment from Gemini Corp. (the lessor). The...

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Q1.On December 31, 2019, Venus Corp. (the lessee) leases equipment from Gemini Corp. (the lessor). The present value of the lease payments shown below are based on the lessee's incremental borrowing rate which is equal to the lessor's implicit rate. The first lease payment is at the inception of the lease on December 31, 2019. Note that the five lease payments are not all the same. The asset will revert to the lessor at the end of the lease on 12/31/2024. There is not a residual value guarantee. When necessary. assume straight-line amortization of leased assets. Other important facts about the lease follow: Inception of the lease Annual lease payments Lease term Economic life of leased equipment Expected RV at end of lease Expected RV after 8 years Lessor's cost of equipment PV of annual lease payments PV of the residual value Total 12/31/2019 See below 5 years 8 years $5,000 None $14,300 $13,065 $3,701 $16.766 Date Lessee Amortization Schedule (partially complete) 12/31/2019 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Total Annual Lease Payments 3,500 3,500 2,500 2,500 2,500 14.500 Interest Reduction of Expense Lease Payable 593 413 3,500 2,907 2,087 Lease Payable 13,065 9,565 6,658 4,570 Q1 (cont.) For the next five questions, assume the lease is a financing lease (sales-type). Show supporting calculations for every question. a. What is the lessee's annual amortization expense for the leased asset? b. To the nearest dollar, what is the lessee's interest expense for 2023? c. What is the balance of lessor's Lease Receivable on 1/1/2020? d. What is the amount of gross profit recognized by the lessor in 2019? e. What is the lessor's interest income for 2020? Q1 (cont.) For the remaining four questions, assume the lease is an operating lease. Show supporting calculations for every question. f. What is the total lease expense that will be recognized by the lessee for2020? g. What is the dollar amount of lessee's amortization of the leased asset for 2020? h. What is the lessee's balance of the account, Leased Equipmentat 12/31/2021? i. Make all entries required by the lessor for 12.31.2019 and 12/31/2020. 12/31/2019 12/31/2020 Q2. On December 31, 2018, Vegas Corp. (the lessor) leases equipment to Magnus (the lessee). The first lease payment is at the inception of the lease (12/31/2018), followed by four additional year-end lease payments (2019 through 2022). The lessor and lessee have a December 31 fiscal year end. The lease qualifies as a financing lease (sales type). Other important facts about the lease follow: Inception of the lease Annual payments Expected RV at EOL (probable residual value) Guaranteed RV at EOL (guaranteed residual value) Lease term (years) Economic life of leased equipment (years) Lessor's cost for the leased asset 12/31/2018 $1,500 1,000 2,300 5 9 $6,388 Using an appropriate 5.5% interest rate, the following present values were calculated: PV of five annual lease payments $6,758 PV of the $1,000 expected residual value $765 PV of $2,300 guaranteed residual value $1,760 0 Q2.(a) and (b). Assume the lessee agreed to the residual value guarantee shown in the table above. a. What should the lessee report as annual amortization of the leased asset? Calculations: b. Make all journal entries for the lessor for 2018 and 2019. Show supporting calculations. 12/31/2018 b. Make all journal entries for the lessor for 2018 and 2019. Show supporting calculations. 12/31/2018 12/31/2019 Q2. (c) Now assume that the lessee did NOT provide the $2,300 residual value guarantee. All other facts are unchanged. Repeat all journal entries for the lessor for 2018 and 2019. Date the entries. Show supporting calculations. 12/31/2018 12/31/2019 Q1.On December 31, 2019, Venus Corp. (the lessee) leases equipment from Gemini Corp. (the lessor). The present value of the lease payments shown below are based on the lessee's incremental borrowing rate which is equal to the lessor's implicit rate. The first lease payment is at the inception of the lease on December 31, 2019. Note that the five lease payments are not all the same. The asset will revert to the lessor at the end of the lease on 12/31/2024. There is not a residual value guarantee. When necessary. assume straight-line amortization of leased assets. Other important facts about the lease follow: Inception of the lease Annual lease payments Lease term Economic life of leased equipment Expected RV at end of lease Expected RV after 8 years Lessor's cost of equipment PV of annual lease payments PV of the residual value Total 12/31/2019 See below 5 years 8 years $5,000 None $14,300 $13,065 $3,701 $16.766 Date Lessee Amortization Schedule (partially complete) 12/31/2019 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Total Annual Lease Payments 3,500 3,500 2,500 2,500 2,500 14.500 Interest Reduction of Expense Lease Payable 593 413 3,500 2,907 2,087 Lease Payable 13,065 9,565 6,658 4,570 Q1 (cont.) For the next five questions, assume the lease is a financing lease (sales-type). Show supporting calculations for every question. a. What is the lessee's annual amortization expense for the leased asset? b. To the nearest dollar, what is the lessee's interest expense for 2023? c. What is the balance of lessor's Lease Receivable on 1/1/2020? d. What is the amount of gross profit recognized by the lessor in 2019? e. What is the lessor's interest income for 2020? Q1 (cont.) For the remaining four questions, assume the lease is an operating lease. Show supporting calculations for every question. f. What is the total lease expense that will be recognized by the lessee for2020? g. What is the dollar amount of lessee's amortization of the leased asset for 2020? h. What is the lessee's balance of the account, Leased Equipmentat 12/31/2021? i. Make all entries required by the lessor for 12.31.2019 and 12/31/2020. 12/31/2019 12/31/2020 Q2. On December 31, 2018, Vegas Corp. (the lessor) leases equipment to Magnus (the lessee). The first lease payment is at the inception of the lease (12/31/2018), followed by four additional year-end lease payments (2019 through 2022). The lessor and lessee have a December 31 fiscal year end. The lease qualifies as a financing lease (sales type). Other important facts about the lease follow: Inception of the lease Annual payments Expected RV at EOL (probable residual value) Guaranteed RV at EOL (guaranteed residual value) Lease term (years) Economic life of leased equipment (years) Lessor's cost for the leased asset 12/31/2018 $1,500 1,000 2,300 5 9 $6,388 Using an appropriate 5.5% interest rate, the following present values were calculated: PV of five annual lease payments $6,758 PV of the $1,000 expected residual value $765 PV of $2,300 guaranteed residual value $1,760 0 Q2.(a) and (b). Assume the lessee agreed to the residual value guarantee shown in the table above. a. What should the lessee report as annual amortization of the leased asset? Calculations: b. Make all journal entries for the lessor for 2018 and 2019. Show supporting calculations. 12/31/2018 b. Make all journal entries for the lessor for 2018 and 2019. Show supporting calculations. 12/31/2018 12/31/2019 Q2. (c) Now assume that the lessee did NOT provide the $2,300 residual value guarantee. All other facts are unchanged. Repeat all journal entries for the lessor for 2018 and 2019. Date the entries. Show supporting calculations. 12/31/2018 12/31/2019

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