**Lease Asset Example: Alexis Computer Company****Introduction:** Alexis Computer Company manufactures and sells or leases various types of computer equipment. On January 1, 2019, Alexis leased a complete computer system to Edgar Enterprises. The relevant data relating to the lease are as follows:| **Lease Data** | **Amount** ||--------------------------------------------------|------------|| Cost of equipment to Alexis | $80,000 || Fair market value of equipment at 1/1/19 | $98,000 || Useful life of equipment | 8 years || Lease term | 5 years || Residual value at the end of the lease (not guaranteed by Edgar) | $15,000 || Implicit and incremental interest rates | 10% || Initial direct costs incurred in negotiation | $1,000 |**Depreciation Method**: Both the lessor and lessee use straight-line depreciation and have accounting periods that end on December 31.**Required:****a. Calculate the yearly payment that Alexis will charge Edgar under this lease agreement if payments are made on January 1 of each year, beginning January 1, 2019.****b. Prepare all journal entries that would be made by Alexis (lessor) during 2019 and 2020 relating to this lease.****c. Prepare all journal entries that would be made by Edgar (lessee) during 2019 and 2020 relating to this lease.****d. Prepare the journal entries made by both Alexis and Edgar with respect to the lease termination if the actual residual value of the computer equipment is $12,500.**---**Graph/Diagram Explanation:**There are no graphs or diagrams in the provided text. All information is presented in a tabular format for clarity on financial values and lease terms.---This example can be used as a case study for understanding the application of lease accounting under current financial reporting standards, offering a practical approach to both lessor and lessee accounting for leased assets.

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ed: Calculate the yearly payment that Alexis will charge Edgar under this lease agreement if payments are made on 1/1 of each year, beginning 1/1/19. a. o. Prepare all journal entries that would be made by Alexis (lessor) during 2019 and 2020 relating to this lease. . Prepare all journal entries that would be made by Edgar (lessee) during 2019 and 2020 relating to this lease.

ed: Calculate the yearly payment that Alexis will charge Edgar under this lease agreement if payments are made on 1/1 of each year, beginning 1/1/19. a. o. Prepare all journal entries that would be made by Alexis (lessor) during 2019 and 2020 relating to this lease. . Prepare all journal entries that would be made by Edgar (lessee) during 2019 and 2020 relating to this lease.

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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