Exercise 15–11
Present Value of Lease Payments:
contract present
payments value
Requirement 1
January 1, 2018
………………….Lease payable (PV calculated above)
……………………………………….Cash (lease payment)
March 31, 2018
……………………………………….Cash (lease payment)
…………………………………Right-of-use equipment
Exercise 15–11 (concluded)
Requirement 2
January 1, 2018
……………Sales revenue (present value of lease payments)
………………………………………Equipment (carrying value)
…………………………………………………Lease receivable
March 31, 2018
…………………………………..Lease receivable (difference)
Exercise 15-12
Exercise 15-12
Requirement 1
Income Statement:
present value of an annuity due of $1: n=9, i=10%
Requirement 2
Balance Sheet:
Lease payable
Initial balance ($25,000 x 6.33493)$158,373
Right-of-Use Asset
Initial balance $158,373
Exercise 15-12 (concluded)
Journal entries (not required):
January 1, 2018
present value of an annuity due of $1: n=9, i=10%
……………………………………….Cash (lease payment)
December 31, 2018
……………………………………….Cash (lease payment)
…………………………………………Right-of-use asset
Exercise 15-13
Requirement 1
Income Statement:
In an operating lease, the lessee records interest the normal way (at the
Requirement 2
Balance Sheet:
Lease Payable
Right-of-Use Asset
Exercise 15-13 (concluded)
Journal entries (not required):
January 1, 2018
present value of an annuity due of $1: n=9, i=10%
December 31, 2018
……………………………………….Cash (lease payment)
…………………………………………Right-of-use asset
Exercise 15-14
Requirement 1
Income Statement:
In an operating lease, the lessor records lease revenue on a straight-line
basis. The lessor, having recorded no entry affecting its balance sheet at the
beginning of the lease, simply records lease payments as lease revenue on a
straight-line basis and records depreciation on the asset it doesn’t remove from
its records.
Requirement 2
Balance Sheet:
In an operating lease, the lessor records lease revenue on a straight-line
Exercise 15-14 (concluded)
Journal entries (not required):
January 1, 2018
[No entry to record receivable or to derecognize asset]
December 31, 2018
Lease revenue ……………………………………………………
Deferred lease revenue ……………………………………..
Exercise 15-15
Requirement 1
The price at which the lessor is “selling” the asset being leased is the present
value of the lease payments:
(rounded)
present value of an annuity due of $1: n=6, i=5%
Requirement 2
below:
January 1, interest revenue………………………………… $ 0
Also:
Depreciation not required because the asset is
Journal entry (not required):
Beginning of lease
…………………………………….Sales revenue (present value)
…………………………………….Asset for lease (lessor’s cost)
End of fiscal year