I didn't think you record anything for Green, but it seems to want an answer that I can't find. Please help. Renewable Co. uses leasing as a secondary means of selling its products. The company contracted with Green Corporation to lease a machine with aneconomic life of 12 years to be used by Green Corporation in its operations. The fair value of the asset at the inception of the lease was $400,000; it costRenewable Co. $360,000 and is carried as equipment at that value. Payments of $44,925 are to be made by Green Corporation at the beginning of eachof the eight years of the lease. Renewable Co.'s implicit interest rate is 6% per year, which is not known by Green Corporation. Green Corporation'sincremental borrowing rate is 7%. Renewable Co. estimates the residual value of the leased asset to be $166,217 at the end of the lease term. Theresidual value is not guaranteed by Green Corporation. Renewable Co. will depreciate the equipment on a straight-line basis (assume no salvage value).a. How would Green Corporation classify the lease? Operating Leaseb. What balances (account titles, amounts) appear on Green's balance sheet at the end of the first year, related to the lease?Note: Round your final answers to the nearest whole dollar.Balance SheetEnd of Year OneAssetsNoncurrent AssetsRight-of-Use AssetLiabilitiesCurrent liabilitiesLease Liability44,925 VNoncurrent liabilitiesLease Liabilityc. What balances (account titles, amounts) appear on Green's income statement for the first year, related to the lease?Income StatementYear OneExpensesLease Expense44,925 v

a. The nature of the lease agreement is operating for both as the ownership of the lease is not…

a. How would Green Corporation classify the lease? Operating Lease b. What balances (account titles, amounts) appear on Green's balance sheet at the end of the first year, related to the lease? Note: Round your final answers to the nearest whole dollar. Balance Sheet End of Year One Assets Noncurrent Assets Right-of-Use Asset Liabilities Current liabilities Lease Liability 44,925 Noncurrent liabilities Lease Liability c. What balances (account titles, amounts) appear on Green's income statement for the first year, related to the lease? Income Statement Year One Expenses Lease Expense 44,925

a. How would Green Corporation classify the lease? Operating Lease b. What balances (account titles, amounts) appear on Green's balance sheet at the end of the first year, related to the lease? Note: Round your final answers to the nearest whole dollar. Balance Sheet End of Year One Assets Noncurrent Assets Right-of-Use Asset Liabilities Current liabilities Lease Liability 44,925 Noncurrent liabilities Lease Liability c. What balances (account titles, amounts) appear on Green's income statement for the first year, related to the lease? Income Statement Year One Expenses Lease Expense 44,925

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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