50.1K

Verified Solution

Link Copied!

Question: Leased Assets Koffman and Sons signed a four-year lease for a forklift on January 1, 2014. Annual lease payments of $1,270, based on an interest rate of 6%, are to be made every December 31, beginning with December 31, 2014. Required: 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? - Select your answer -YesNoCorrect 1 of Item 1 b. What account will indicate that lease payments have been made? - Select your answer -Interest expenseLease expenseLease obligationBoth the Interest Expense and Lease Obligation accountsCorrect 2 of Item 1 2. Assume that the lease is treated as a capital lease. a. Identify and analyze the effect when the lease is signed. Activity - Select your answer -OperatingInvestingFinancingInvesting and FinancingCorrect 1 of Item 2 Accounts - Select your answer -Leased Asset Increase, Lease Liability IncreaseLeased Asset Increase, Lease Liability DecreaseLeased Asset Decrease, Lease Liability IncreaseLeased Asset Decrease, Lease Liability DecreaseCorrect 2 of Item 2 Statement(s) - Select your answer -Balance Sheet onlyIncome Statement onlyBalance Sheet and Income StatementCorrect 3 of Item 2 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. Balance Sheet Income Statement Assets = Liabilities + Stockholders' Equity Revenues Expenses = Net Income - Select your answer -CashLease LiabilityLeased AssetLeased Asset ExpenseRent ExpenseNo EntryCorrect 1 of Item 3 - Select your answer -CashInterest PayableLease LiabilityLeased AssetLeased Asset ExpenseNo EntryCorrect 3 of Item 3 - Select your answer -CashInterest PayableLease LiabilityLeased AssetLeased Asset ExpenseNo EntryCorrect 6 of Item 3 - Select your answer -CashLease LiabilityLeased AssetLeased Asset ExpenseRent ExpenseNo EntryCorrect 8 of Item 3 b. Identify and analyze the effect of the first lease payment on December 31, 2014. Activity - Select your answer -OperatingInvestingFinancingOperating and FinancingCorrect 1 of Item 4 Accounts - Select your answer -Cash Increase, Lease Liability Decrease, Interest Expense IncreaseCash Increase, Lease Liability Decrease, Interest Expense DecreaseCash Decrease, Lease Liability Decrease, Interest Expense IncreaseCash Decrease, Lease Liability Decrease, Interest Expense DecreaseCorrect 2 of Item 4 Statement(s) - Select your answer -Balance Sheet onlyIncome Statement onlyBalance Sheet and Income StatementCorrect 3 of Item 4 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. Balance Sheet Income Statement Assets = Liabilities + Stockholders' Equity Revenues Expenses = Net Income - Select your answer -CashInterest ExpenseInterest PayableInterest RevenueLeased AssetNo EntryCorrect 1 of Item 5 - Select your answer -CashLease LiabilityLeased AssetLeased Asset ExpenseRent ExpenseNo EntryCorrect 3 of Item 5 - Select your answer -CashLease LiabilityLeased AssetLeased Asset ExpenseRent ExpenseNo EntryCorrect 6 of Item 5 - Select your answer -CashInterest ExpenseInterest PayableInterest RevenueLeased AssetNo EntryCorrect 8 of Item 5 c. Calculate the amount of depreciation expense for the year 2014. Round answer to the nearest whole dollar. $ d. At what amount would the lease obligation be presented on the balance sheet as of December 31, 2014? Round answers to the nearest whole dollar. Current liability portion $ Long-term liability portion $

Leased Assets

Koffman and Sons signed a four-year lease for a forklift on January 1, 2014. Annual lease payments of $1,270, based on an interest rate of 6%, are to be made every December 31, beginning with December 31, 2014.

Required:

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? - Select your answer -YesNoCorrect 1 of Item 1

b. What account will indicate that lease payments have been made? - Select your answer -Interest expenseLease expenseLease obligationBoth the Interest Expense and Lease Obligation accountsCorrect 2 of Item 1

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

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

Activity	- Select your answer -OperatingInvestingFinancingInvesting and FinancingCorrect 1 of Item 2
Accounts	- Select your answer -Leased Asset Increase, Lease Liability IncreaseLeased Asset Increase, Lease Liability DecreaseLeased Asset Decrease, Lease Liability IncreaseLeased Asset Decrease, Lease Liability DecreaseCorrect 2 of Item 2
Statement(s)	- Select your answer -Balance Sheet onlyIncome Statement onlyBalance Sheet and Income StatementCorrect 3 of Item 2

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.

Balance Sheet

Income Statement

Assets

=

Liabilities

+

Stockholders' Equity

Revenues

Expenses

=

Net Income

- Select your answer -CashLease LiabilityLeased AssetLeased Asset ExpenseRent ExpenseNo EntryCorrect 1 of Item 3

- Select your answer -CashInterest PayableLease LiabilityLeased AssetLeased Asset ExpenseNo EntryCorrect 3 of Item 3

- Select your answer -CashInterest PayableLease LiabilityLeased AssetLeased Asset ExpenseNo EntryCorrect 6 of Item 3

- Select your answer -CashLease LiabilityLeased AssetLeased Asset ExpenseRent ExpenseNo EntryCorrect 8 of Item 3

b. Identify and analyze the effect of the first lease payment on December 31, 2014.

Activity	- Select your answer -OperatingInvestingFinancingOperating and FinancingCorrect 1 of Item 4
Accounts	- Select your answer -Cash Increase, Lease Liability Decrease, Interest Expense IncreaseCash Increase, Lease Liability Decrease, Interest Expense DecreaseCash Decrease, Lease Liability Decrease, Interest Expense IncreaseCash Decrease, Lease Liability Decrease, Interest Expense DecreaseCorrect 2 of Item 4
Statement(s)	- Select your answer -Balance Sheet onlyIncome Statement onlyBalance Sheet and Income StatementCorrect 3 of Item 4

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.

Balance Sheet

Income Statement

Assets

=

Liabilities

+

Stockholders' Equity

Revenues

Expenses

=

Net Income

- Select your answer -CashInterest ExpenseInterest PayableInterest RevenueLeased AssetNo EntryCorrect 1 of Item 5

- Select your answer -CashLease LiabilityLeased AssetLeased Asset ExpenseRent ExpenseNo EntryCorrect 3 of Item 5

- Select your answer -CashLease LiabilityLeased AssetLeased Asset ExpenseRent ExpenseNo EntryCorrect 6 of Item 5

- Select your answer -CashInterest ExpenseInterest PayableInterest RevenueLeased AssetNo EntryCorrect 8 of Item 5

c. Calculate the amount of depreciation expense for the year 2014. Round answer to the nearest whole dollar. $

d. At what amount would the lease obligation be presented on the balance sheet as of December 31, 2014? Round answers to the nearest whole dollar.

Current liability portion	$
Long-term liability portion	$ notttttttttteeeeee: please give me a proper answer i losse my money all the time.

Answer & Explanation Solved by verified expert

See Answer