Grichuk Power leased high-tech electronic equipment from KoltenLeasing on January 1, 2018. Kolten purchased the equipment fromWong Machines at a cost of $253,500, its fair value. (FV of $1, PVof $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)(Use appropriate factor(s) from the tablesprovided.)
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| Related Information: |
| Lease term | 2 years (8 quarterly periods) |
| Quarterly lease payments | $18,500 at Jan. 1, 2018, and at Mar. 31, June 30, Sept. 30, andDec. 31 thereafter. |
| Economic life of asset | 5 years |
| Interest rate charged by the lessor | 12% |
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Required:
Prepare a lease amortization schedule and appropriate entries forGrichuk Power from the commencement of the lease through December31, 2018. December 31 is the fiscal year end for each company.Appropriate adjusting entries are recorded at the end of eachquarter.
