View the step-by-step solution to:


Leased Assets

Koffman and Sons signed a four-year lease for a forklift on January 1, 2017. Annual lease

payments of $1,448, based on an interest rate of 6%, are to be made every December 31, beginning with December 31, 2017.

PV of Annuity of $1


Refer to the table above for present value factors.

1. Assume that the lease is treated as an operating lease.

a. Will the value of the forklift appear on Koffman's balance sheet?


b. What account will indicate that lease payments have been made?


2. Assume that the lease is treated as a capital lease or finance lease.

a.  Identify and analyze the effect when the lease is signed.




How does this entry affect the accounting equation?

If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Round answers to the nearest whole dollar.

Recently Asked Questions

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
Ask Expert Tutors You can ask You can ask ( soon) You can ask (will expire )
Answers in as fast as 15 minutes