Leases On January 1, Spider, Inc., entered into two lease contracts. The first lease contract was a six-year lease for a computer with $15,000 annual lease payments due at the end of each year. Spider took possession of the computer on January 1. The equipment has a useful life of six years. The second lease contract was a six-month lease, beginning January 1 for warehouse storage space with $1,000 monthly lease payments due the first of each month. Spider made the first month's payment on January 1. The present value of the lease payments under the first contract is $74,520. The present value of the lease payments under the second contract is $5,853. a. Determine the financial statement effect of the first lease on January 1. b. Determine the financial statement effect of the second lease on January 1. Balance Sheet Income Statement Transaction Assets = Liabilities + Equity Revenues - Expenses = Net Income

Leases On January 1, Spider, Inc., entered into two lease contracts. The first lease contract was a six-year lease for a computer with $15,000 annual lease payments due at the end of each year. Spider took possession of the computer on January 1. The equipment has a useful life of six years. The second lease contract was a six-month lease, beginning January 1 for warehouse storage space with $1,000 monthly lease payments due the first of each month. Spider made the first month's payment on January 1. The present value of the lease payments under the first contract is $74,520. The present value of the lease payments under the second contract is $5,853. a. Determine the financial statement effect of the first lease on January 1. b. Determine the financial statement effect of the second lease on January 1. Balance Sheet Income Statement Transaction Assets = Liabilities + Equity Revenues - Expenses = Net Income

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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