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information here may be needed Problem 2: Assume the same facts as for Problem...

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Accounting

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Problem 2: Assume the same facts as for Problem 1. A. For the lessor, is the lease a finance lease or an operating lease? Explain why or why not. B. Prepare the lessor's journal entries through 12-31-Yr 1. C. What accounts and balances will be shown on the classified balance sheet and multistep income statement at 12-31-Yr2? Name of Account Balance Financial Statement Account Classification Problem 1: The following facts pertain to a non-cancelable lease agreement between Lessee and Lessor: Date of the Lease 12/31/Yro Annual lease payment (Payment 1 due immediately) (Present Value = $6,684) $2,338 Guaranteed Residual Value (Lessee expects to meet) (Present Value =$1,316) $1,523 Lease Term 3 years Economic Life of Leased Asset 5 years Lessor's Cost of the asset $6,000 Fair Value of the asset $8,000 Lessor's Implicit Rate & Lessee's Incremental Borrowing Rate 5% | The collectability of the lease payments by Lessor is probable

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