Quiz 1 ACCT 302.docx - ACCT 302 QUIZ#1 1 On Blue Inc leased...

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ACCT 302 QUIZ#1 1. On June 30, 2018, Blue, Inc. leased a machine from Big Leasing Corporation. The lease agreement qualifies as a capital lease and calls for Blue to make semiannual lease payments of $165,969 over a five-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2018. Blue’s 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. ( FV of $1 , PV of $1 , FVA of $1 , PVA of $1 , FVAD of $1 and PVAD of $1 ) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the present value of the lease payments at June 30, 2018, (to the nearest $000) that Blue uses to record the right-of-use asset and lease liability. 2. What would be the amounts related to the lease that Blue would report in its balance sheet at December 31, 2018? (Ignore taxes.) 3.What would be the amounts related to the lease that Blue would report in its income statement for the year ended December 31, 2018? (Ignore taxes.) 2.
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