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On January 1, 2011, National Insulation Corporation (NIC) leased office space under a capital lease. Lease payments are made annually.

On January 1, 2011, National Insulation Corporation (NIC) leased office space under a capital lease. Lease payments are made annually. Title does not transfer to the lessee and there is no bargain purchase option. Portions of the lessee's lease amortization schedule appear below:

Jan. 1 Payments Effective Interest Decrease in Balance Outstanding Balance
2011 229,961
2011 24,000 24,000 205,961
2012 24,000 20,596 3,404 202,557
2013 24,000 20,256 3,744 198,813
2014 24,000 19,881 4,119 194,694
2015 24,000 19,469 4,531 190,163
2016 24,000 19,016 4,984 185,179
— — — — —
— — — — —
— — — — —
2028 24,000 8,359 15,641 67,950
2029 24,000 6,795 17,205 50,745
2030 24,000 5,075 18,925 31,820
2031 35,000 3,180 31,820 0

Required:
(1)
What is NIC’s lease liability at the inception of the lease (after the first payment)? (Omit the "$" sign in your response.)

Lease liability $

(2)
What amount would NIC record as a leased asset? (Omit the "$" sign in your response.)

Leased asset $

(3)
What is the lease term in years?

Lease term years

(4)
What is the asset’s residual value expected at the end of the lease term? (Omit the "$" sign in your response.)

Asset's residual value $

(5)
How much of the residual value is guaranteed by the lessee? (Omit the "$" sign in your response.)

Residual value $

(6)
What is the effective annual interest rate? (Round your answer to the nearest whole percent. Omit the "%" sign in your response.)

Effective annual interest rate %

(7)
What is the total amount of minimum lease payments? (Omit the "$" sign in your response.)

Total amount of minimum lease payments $

(8)
What is the total effective interest expense recorded over the term of the lease? (Omit the "$" sign in your response.)

Total effective interest expense $
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