9.

2: Operating lease

constructive lease payments 45303

interest 14%
number of years 4
PV of future payments

a. Initial liability lease interest lease payment

6/30/2020 $ 132,000 $ 18,480 $ 45,303
6/30/2021 $ 105,177 $ 14,725 $ 45,303
6/30/2022 $ 74,599 $ 10,444 $ 45,303
6/30/2023 $ 39,740 $ 5,564 $ 45,303
PV annuity =45303/0.14*(1-(1/1.14)^4)
=132000

Principal payment liability total

$ 26,823 $ 105,177
$ 30,578 $ 74,599
$ 34,859 $ 39,740
$ 39,739 $ 0
9.3: Operating lease
Lease paymennt at beginning 30000
Consecutive lease payment 30000
Initial direct costs
interest rate 9%
# of yrs 3
PV future payments $ 75,939
a. Initial liability
1 1/1/2019 $ 75,939
2 1/1/2020 $ 82,774
3 1/1/2021 $ 57,523
4 1/1/2022 $ 30,000

b. Right of use $ 105,939

c. Annual dep $ 13,985
Residual value 50000
Yrs 4

Accounting Equation

Date Transaction
Cash
1. $ -30,000.00

2. $ -30,000.00
3.
4.

Balance $ -60,000.00

Total (check) $ 30,954.00

lease payment balance interest liability end
= 0(bc its already paid in the beginning) $ 75,939 $ 6,835 $ 82,774
$ 30,000 $ 52,774 $ 4,750 $ 57,523
$ 30,000 $ 27,523 $ 2,477 $ 30,000
$ 30,000 $ 0 $ 0 $ 0

Total Assets = Total Liabilities +

All other Assets (Account) All liabilities (Account)

$ 105,939.00 Right-of use asset $ 75,939.00 Lease liability
$ 6,834.00 Lease liability (interest)
$ -30,000.00 Lease liability
$ -14,985.00 Acc Dep

$ 90,954.00 $ 52,773.00

$ 31,954.00
 Shareholder's equity
Contributed CRetained Earnings
Common Stock (Account)

ability (interest) $ -6,834.00 Interest expense

$ -13,985.00 dep

$ - $ -20,819.00
9.3: Finance lease
Lease paymennt at beginning 6595
Consecutive lease payment 6595
Initial direct costs 500
interest rate 10%
# of yrs 4
PV future payments $ 20,905
a. Initial liability lease
1 12/31/2019 $ 20,905
2 12/31/2020 $ 22,996
3 12/31/2021 $ 18,041
4 12/31/2022 $ 12,590
1/1/2023 $ 6,595

b. Right of use $ 28,000

c. Annual dep $ 3,571
Residual value 3000
Yrs 7
IN EXAM
Accounting Equation

Date Transaction
Cash
$ -7,095.00

$ -6,595.00

Balance $ -13,690.00

Total (check) $ 10,738.80

Lease payment
$ -
$ 6,595
$ 6,595
$ 6,595
$ 6,595
Balance Interest
$ 20,905 $ 2,091
$ 16,401 $ 1,640
$ 11,446 $ 1,145
$ 5,995 $ 600
$ - $ -

Total Assets = Total Liabilities +

All other Assets (Account) All liabilities

$ 28,000 Right-of use asset $ 20,905.26
$ 2,090.53
$ -3,571.47 Acc Dep
$ -6,595.00

$ 24,428.80 $ 16,400.79

$ 10,738.80
 liability total
$ 22,996
$ 18,041
$ 12,590
$ 6,595
$ -

Total Liabilities + Shareholder's equity

Contributed CRetained Earnings
(Account) Common Stock (Account)
Lease liability
Lease liability (interest) $ -2,090.53 Interest expense
$ -3,571.47 dep
Lease liability

$ - $ -5,661.99