(Balance Sheet and Income Statement Disclosure?Lessor)
The following facts pertain to a noncancelable lease agreement between Alschuler Leasing Company and McKee Electronics, a lessee, for a computer system.
The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor. The lessee assumes responsibility for all executory costs, which amount to $5,500 per year and are to be paid each October 1, beginning October 1, 2014. (This $5,500 is not included in the rental payment of $62,700.) The asset will revert to the lessor at the end of the lease term. The straight-line depreciation method is used for all equipment. The following amortization schedule has been prepared correctly for use by both the lessor and the lessee in accounting for this lease. The lease is to be accounted for properly as a capital lease by the lessee and as a direct-financing lease by the lessor.
|(a)|| Assuming the lessee's accounting period ends on September 30, answer the following questions with respect to this lease agreement. |
|(b)|| Assuming the lessor's accounting period ends on December 31, answer the following questions with respect to this lease agreement. |
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This question was answered on: Oct 14, 2020
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