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

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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
 
 

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!!

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: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
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%
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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