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Neri Foods Corporation leased a commercial food processor on September 30, 2024. The five-year finance lease agreement calls or Neri to make quarterly lease payments of $78,310, payable each September 30, December 31, March 31, June 30, with the first ayment at September 30, 2024. Neri's incremental borrowing rate is 12%. Neri records amortization on a straight-line basis at the nd of each fiscal year. Neri recorded the lease as follows: September 30, 2024

Neri Foods Corporation leased a commercial food processor on September 30, 2024. The five-year finance lease agreement calls or Neri to make quarterly lease payments of $78,310, payable each September 30, December 31, March 31, June 30, with the first ayment at September 30, 2024. Neri's incremental borrowing rate is 12%. Neri records amortization on a straight-line basis at the nd of each fiscal year. Neri recorded the lease as follows: September 30, 2024

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Neri Foods Corporation leased a commercial food processor on September 30, 2024. The five-year finance lease agreement calls for Neri to make quarterly lease payments of $78,310, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2024. Neri's incremental borrowing rate is 12%. Neri records amortization on a straight-line basis at the end of each fiscal year. Neri recorded the lease as follows: September 30, 2024 General Journal Right-of-use asset (calculated below) Lease payable (calculated below) Lease payable Cash (first payment) Calculation of the present value of lease payments $78,310 x 15.3238* = $1,200,000 (rounded) 'Present value of an annuity due of $1: n = 20, i = 3% Required: What would be the pretax amounts related to the lease that Neri would report in its statement of cash flows for the year ended December 31, 2024? Item Right-of-use asset Lease payments: Debit 1,200,000 Principal Interest 78,310 Note: Cash outflows should be indicated with a minus sign. Do not round your intermediate calculations. Enter your answers in whole dollars and not in millions. Outflow from financing activities Outflow from operating activities Credit Reported in Statement of Cash Flows as Disclosure notes for Statement of Cash Flows 1,200,000 78,310 $ Amount 1,200,000
Transcribed Image Text:Neri Foods Corporation leased a commercial food processor on September 30, 2024. The five-year finance lease agreement calls for Neri to make quarterly lease payments of $78,310, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2024. Neri's incremental borrowing rate is 12%. Neri records amortization on a straight-line basis at the end of each fiscal year. Neri recorded the lease as follows: September 30, 2024 General Journal Right-of-use asset (calculated below) Lease payable (calculated below) Lease payable Cash (first payment) Calculation of the present value of lease payments $78,310 x 15.3238* = $1,200,000 (rounded) 'Present value of an annuity due of $1: n = 20, i = 3% Required: What would be the pretax amounts related to the lease that Neri would report in its statement of cash flows for the year ended December 31, 2024? Item Right-of-use asset Lease payments: Debit 1,200,000 Principal Interest 78,310 Note: Cash outflows should be indicated with a minus sign. Do not round your intermediate calculations. Enter your answers in whole dollars and not in millions. Outflow from financing activities Outflow from operating activities Credit Reported in Statement of Cash Flows as Disclosure notes for Statement of Cash Flows 1,200,000 78,310 $ Amount 1,200,000
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