Lee Company entered into a lease of warehouse on January 1, 2020. The lease contract provided the following information: Lease term 5 years Estimated useful life of the leased asset 15 years Annual rental payable at the end of each year 600,000 Interest rate implicit in the lease 12% Included in the lease agreement an option for the lessee to extend the lease term for another 5 years. At the commencement date, the exercise of the extension option is not reasonably certain. At the December 31, 2022, the lessee decided to extend the lease for further 5 years. The agreement was finalized on January 1, 2023 with following arrangement on the extension option: New annual rental payable at the end of each year 700,000 New interest rate implicit in the lease 10% REQUIRED: Prepare table of amortization and journal entries for the entire lease term.
Lee Company entered into a lease of warehouse on January 1, 2020. The lease contract provided the following information:
Lease term 5 years
Estimated useful life of the leased asset 15 years
Annual rental payable at the end of each year 600,000
Interest rate implicit in the lease 12%
Included in the lease agreement an option for the lessee to extend the lease term for another 5 years. At the commencement date, the exercise of the extension option is not reasonably certain.
At the December 31, 2022, the lessee decided to extend the lease for further 5 years. The agreement was finalized on January 1, 2023 with following arrangement on the extension option:
New annual rental payable at the end of each year 700,000
New interest rate implicit in the lease 10%
REQUIRED: Prepare table of amortization and
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