The Harris Company is the lessee on a four-year lease with the following payments at the end of each year: Year 1: $ 12,000
Year 2: $ 17,000
Year 3: $ 22,000
Year 4: $ 27,000
An appropriate discount rate is 7 percentage, yielding a present value of $64,620.
a-1. If the lease is an operating lease, what will be the initial value of the right-of-use asset?
Initial value of the right-of-use asset?
a-2. If the lease is an operating lease, what will be the initial value of the lease liability?
Initial value of the lease liability?
a-3. If the lease is an operating lease, what will be the lease expense shown on the income statement at the end of year 1?
Lease expense?
a-4. If the lease is an operating lease, what will be the interest expense shown on the income statement at the end of year 1? (Leave no cells blank – be certain to enter "0" wherever required.)
Interest expense
a-5. If the lease is an operating lease, what will be the amortization expense shown on the income statement at the end of year 1? (Leave no cells blank – be certain to enter "0" wherever required.)
Amortization expense?
b-1. If the lease is a finance lease, what will be the initial value of the right-of-use asset?
initial value of the right-of-use asset?
b-2. If the lease is a finance lease, what will be the initial value of the lease liability?
Initial value of the lease liability?
b-3. If the lease is a finance lease, what will be the lease expense shown on the income statement at the end of year 1? (Leave no cells blank – be certain to enter "0" wherever required.)
Lease expense?
b-4. If the lease is a finance lease, what will be the interest expense shown on the income statement at the end of year 1? (Round your answer to the nearest dollar amount.)
Interest expense?
b-5. If the lease is a finance lease, what will be the amortization expense shown on the income statement at the end of year 1? (Round your answer to the nearest dollar amount.)
Amortization expense?