Homework Quiz—5

Homework Quiz—5 - Name Section Homework...

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Name Section Homework Quiz—5 1. ABC Company (the lessee ) entered into an 8-year, 11% capital lease with XYZ Products. The first three lines of ABC’s lease liability table appear below. The property ABC leased from XYZ had a cost to XYZ of $190,000 and the present value of the lease payments (for ABC) is $220,000. Assume the asset leased has zero residual value and that there are no Executory Costs. Date Interest Expense Cash Flow Change in Carrying Amount Carrying Amount 1/1/11 220,000 1/1/11 38,514 -38,514 181,486 1/1/12 19,963 38,514 -18,551 162,935 1/1/13 17,923 38,514 -20,591 142,344 1a . In the space below write ABC’s entry to record the capital lease at 1/1/11. 1b . In the space below write ABC’s (lessee) entry to record the adjusting entry for the capital lease at 12/31/11. 1
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1c . In the space below write ABC’s entry to record the payment on the capital lease on 1/1/12 1d . Assume the lease described above was an operating lease rather than a capital lease. In the table below write the entry ABC (the lessee ) will use to record the adjusting entry for the operating lease on 12/31/11.
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