Interim Financial Reporting

Question 1

Capitalized Lease Liability

Answer 1

Lease payments 52,000 - Real estate taxes 2,000
=50,000 * PV 9 year annuity @ 9%
=50,000 * 5.6
=280,000

Question 2

Current Lease Liability

Answer 2

Capital Lease 135,000 - 1st payment 20,000
= 115,000
Inerest Expense 11,500 (115,000 * 10%)
Lease Liability 8,500 2014 current liability
Cash 20,000

Question 3

Interest Revenue on Lease

Answer 3

Fair Value 323,400 / PV annuity 4.132
=75,000 payment * 5 years - 323,400
= 51,600