On June 30, 2024, Blue, Incorporated leased a machine from Big Leasing Corporation. The lease...
80.2K
Verified Solution
Link Copied!
Question
Accounting
On June 30, 2024, Blue, Incorporated leased a machine from Big Leasing Corporation. The lease agreement qualifies as a finance lease and calls for Blue to make semiannual lease payments of $207,082 over a four-year lease term, payable each June 30 and December 31, with the first payment on June 30, 2024. Blues incremental borrowing rate is 8%, the same rate Big uses to calculate lease payment amounts.
The lease agreement qualifies as a finance lease. Amortization is recorded on a straight-line basis at the end of each year.
Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
Required:
Determine the present value of the lease payments on June 30, 2024, that Blue uses to record the right-of-use asset and lease liability.
What would be the amounts related to the lease that Blue would report in its balance sheet at December 31, 2024? (Ignore taxes.)
What would be the amounts related to the lease that Blue would report in its income statement for the year ended December 31, 2024? (Ignore taxes.)
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
