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d. What is the Year-1 imputed interest expense? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. $ e. What lease liability must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. $ f. What right-of-use asset must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent.

d. What is the Year-1 imputed interest expense? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. $ e. What lease liability must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. $ f. What right-of-use asset must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent.

FINANCIAL ACCOUNTING
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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Harmeling Paint Ball (HPB) Corporation needs a new air compressor that costs $80,000. HPB will need it for only 5 years even though the compressor's economic life is long enough so that the lease is an operating lease. The firm can lease the compressor for 5 years with $40,000 lease payments at the end of each year. HPB's cost of debt is 11%. Answer the following questions.

TABLE 19-1 Financial Reporting for Leases Part 1: Preliminary Calculations Year 0 Year 1 Year 2 Year 3 Lease liability balance $26,730 $18,334 $9,434 $0 Imputed interest expense" $1,604 $1,100 $566 Lease payment $10,000 $10,000 $10,000 Part 2: Reporting an Operating Lease Year 0 Year 1 Year 2 Year 3 Lease liability balance $26,730 $18,334 $9,434 $0 Right-of-use asset balance $26,730 $18,334 $9,434 $0 Lease expense" $10,000 $10,000 $10,000 Part 3: Reporting a Finance Lease Year 0 Year 1 Year 2 Year 3 $0 $0 Lease liability balance $26,730 $18,334 $9,434 Right-of-use asset balance $26,730 $17,820 $8,910 Interest expense Amortization expense $1,604 $1,100 $566 $8,910 $8,910 $8,910 Total lease expense $10,514 $10,010 $9,476 Notes:
Transcribed Image Text:TABLE 19-1 Financial Reporting for Leases Part 1: Preliminary Calculations Year 0 Year 1 Year 2 Year 3 Lease liability balance $26,730 $18,334 $9,434 $0 Imputed interest expense" $1,604 $1,100 $566 Lease payment $10,000 $10,000 $10,000 Part 2: Reporting an Operating Lease Year 0 Year 1 Year 2 Year 3 Lease liability balance $26,730 $18,334 $9,434 $0 Right-of-use asset balance $26,730 $18,334 $9,434 $0 Lease expense" $10,000 $10,000 $10,000 Part 3: Reporting a Finance Lease Year 0 Year 1 Year 2 Year 3 $0 $0 Lease liability balance $26,730 $18,334 $9,434 Right-of-use asset balance $26,730 $17,820 $8,910 Interest expense Amortization expense $1,604 $1,100 $566 $8,910 $8,910 $8,910 Total lease expense $10,514 $10,010 $9,476 Notes:
d. What is the Year-1 imputed interest expense? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. e. What lease liability must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. $ f. What right-of-use asset must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent. $
Transcribed Image Text:d. What is the Year-1 imputed interest expense? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. e. What lease liability must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. $ f. What right-of-use asset must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent. $
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