The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Culver Company, a lessee.
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Need immense help before a final. This wont violate honor code it is not for credit.

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The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Culver Company, a lessee. Commencement date January 1, 2017
Annual lease payment due at the beginning of each year, beginning with January 1, 2017 $127,244
Residual value of equipment at end of lease term, guaranteed by the lessee $45,000
Expected residual value of equipment at end of lease term $40,000
Lease term 6 years
Economic life of leased equipment 6 years
Fair value of asset at January 1, 2017 $635,000
Lessor’s implicit rate 10 %
Lessee’s incremental borrowing rate 10 % The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment.

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Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to
0 decimal places e.g. 5,275.)
CULVER COMPANY (Lessee)
Lease Amortization Schedule
Annual Lease
Interest on
Reduction of Lease
Date
Payment Plus GRV
Liability
Liability
Lease Liability
1/1/17
1/1/17
1/1/18
1/1/19
X
X
1/1/20
X
1/1/21
1/1/22
X
x
12/31/22
X
X
to

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Prepare all of the journal entries for the lessee for 2017 and 2018 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee’s annual accounting
period ends on December 31. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the
account titles and enter 0 for the amounts. Round answers to 0 decimal places e.g. 5,275. Record journal entries in the order presented in the problem.) Date Account Tides and Explanation Debit Credit @ ll (To record the lease.) El
D (To record first lease payment.)

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x
X
X
X
(To record interest.)
x
x
x
X
(To record amortization.)
X
x
X
x
X
x
(To reverse the December 31 entry.)
X
x
x
x
X
x
X
X
x
(To record the second lease payment.)

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Suppose Culver received a lease incentive of $5,000 from Faldo Leasing to enter the lease. How would the initial measurement of the lease liability and right-of-use asset be affected?
Right-of-use asset
What if Culver prepaid rent of $5,000 to Faldo?
X
Right-of-use asset

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