# Question & Answer: iPad % 5:01 PM 20% ezto.mheducation.com Login | East Central University Chapter 15 -Homeworlk McGraw-Hill Connect Error Page conec…..

iPad % 5:01 PM 20% ezto.mheducation.com Login | East Central University Chapter 15 -Homeworlk McGraw-Hill Connect Error Page conect Esmeralda Sanpedro Intermediate ACCOUNTING Chapter 15-Homework Question 2 (of 18) 團 ■ Save & Ext Submit 1.25 points A lease agreement that qualifies as a finance lease calls for annual lease payments of \$25,000 over a six-year lease term (also the asset’s useful life), with the first payment at January 1, te beginning of the lease The interest rate is 5%. (EyatSL PyatSL EASI, PAdS1. EVAD of S1 and PVAD of \$1) (Use appropriate factors) from the tables provided.) Required: a. Complete the amortization schedule for the first two payments b. If the lessee’s fiscal year is the calendar year, what would be the amount of the lease lability that the lessee would report in its balance sheet at the end of the first year? What would be the interest payable? Complete this question by entering your answers in the tabs below. Required A Required B Complete the amortization schedule for the first two payments. (Enter all amounts as positive values.) Date 01/01/2016 01/01/206 S 01/01/20117 133,237 108,237 o 25 25 18.338 References Difficulty: 1Easy Learning Objective 15-02 Descibe and demonstrae the lessee accounts for a finance lease and the lessor accounts for a sales-type lease with no selling prot Worksheet

A.

Calculate the present value of the lease payments.

Present value of the lease payments

= Annual lease payment x PVAD of \$1; i = 5%, n = 6

= \$25,000 x 5.3295

= \$133,237.50

Prepare the amortization table.

Above figures have been computed in the following manner:

B.

Lease liability to be reported on the balance sheet at the end of the first year = \$108,237.50

Interest Payable = \$5,411.88