Applying New Lease Accounting Standards for Operating Leases On January 1 of the current year, CCH Corporation entered into the following lease contract. Based on the facts, CCH Corporation classifies the lease as an operating lease. Details of lease contract Leased asset Office space Lease term 5 years Annual lease payment $115,487 Upfront fees $10,000 Cost of debt capital 5% a. Determine the amount of the lease liability that CCH will add to its balance sheet at the inception of the lease. Amount of lease liability
Applying New Lease Accounting Standards for Operating Leases On January 1 of the current year, CCH Corporation entered into the following lease contract. Based on the facts, CCH Corporation classifies the lease as an operating lease. Details of lease contract Leased asset Office space Lease term 5 years Annual lease payment $115,487 Upfront fees $10,000 Cost of debt capital 5% a. Determine the amount of the lease liability that CCH will add to its balance sheet at the inception of the lease. Amount of lease liability
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Applying New Lease Accounting Standards for Operating Leases
On January 1 of the current year, CCH Corporation entered into the following lease contract. Based on the facts, CCH Corporation classifies the lease as an operating lease.
Details of lease contract | ||
---|---|---|
Leased asset | Office space | |
Lease term | 5 | years |
Annual lease payment | $115,487 | |
Upfront fees | $10,000 | |
Cost of debt capital | 5% |
a. Determine the amount of the lease liability that CCH will add to its
Amount of lease liability | |
---|---|
|
b.
What amount will be added to the balance sheet as an asset?
Amount added as an asset | |
---|---|
|
The rest of the questions are given in pictures below. please answer all parts correctly. i will upvote. thank you!!

Transcribed Image Text:d. Prepare a lease amortization schedule that shows the interest and principal portions of each lease payment.
Implicit Interest
(Lease Liability,
Start x cost of debt)
Lease Liability, End
(Lease Liability, Start -
Lease Amortization)
Year
1 $
2
3
4
(a)
LO
(b)
5
(c)
Lease Liability,
Start
($ in millions)
Transaction
0
0
0
0
0
$
Balance Sheet
Cash
Asset
e. Use the financial statement effects template to record (a) the lease inception and (b) lease payment for year one and for (c) year two of the lease term. Also show the asset and lease amortization for those same
two years.
0
Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction.
Note: Indicate a decrease in an account category by including a negative sign with the amount.
♦
0
0
0
0
0
0
$
0
Lease Amortization
(Lease payment -
Implicit interest)
Noncash Assets
0
◆
0 =
0
0
0
0
0
◆
$
0 =
Liabilities
0
0
0
0
0
◆
0
0
0
Contrib. Capital +
0
◆
0
→
0
Earned
Capital
0
♦
0
0
Income Statement
Revenues
0
◆
¶
0
0
I
Expenses
0
0
0
=
Net
Income
0
0
0

Transcribed Image Text:f. At the end of the current year, what additional disclosure would CCH make in its footnotes pertaining to the four remaining lease payments?
December 2020
2021
2022
2023
2024
2025
Thereafter
Total undiscontinued lease payments
Imputed interest
Total Operating lease liability
Weighted average remaining lease life in years
Weighted average discount rate
$
$
0
0
0
0
0
0
0
0
0
0
0%
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