On January 1, 2020, Bridgeport Company contracts to lease equipment for 5 years, agreeing to make a payment of $145,088 at the beginning of each year, starting January 1, 2020. The leased equipment is to be capitalized at $605,000. The asset is to be amortized on a double-declining-balance basis, and the obligation is to be reduced on an effective-interest basis. Bridgeport’s incremental borrowing rate is 6%, and the implicit rate in the lease is 10%, which is known by Bridgeport. Title to the equipment transfers to Bridgeport at the end of the lease. The asset has an estimated useful life of 5 years and no residual value. What amounts will appear on the lessee’s December 31, 2020, balance sheet relative to the lease contract? BRIDGEPORT COMPANY Balance Sheet (Partial) December 31, 2020 Assets select an opening section name Current Assets Current Liabilities Intangible Assets Long-term Investments Noncurrent Liabilities Property, Plant and Equipment Stockholders' Equity Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity Noncurrent Assets enter an account title $enter a dollar amount Liabilities select an opening name for section one Current Assets Current Liabilities Intangible Assets Long-term Investments Noncurrent Liabilities Property, Plant and Equipment Stockholders' Equity Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity enter an account title $enter a dollar amount select an opening name for section two Current Assets Current Liabilities Expenses Intangible Assets Long-term Investments Noncurrent Liabilities Net Income / (Loss) Property, Plant and Equipment Revenues Stockholders' Equity Total Assets Total Current Assets Total Current Liabilities Total Expenses Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Revenues Total Stockholders' Equity enter an account title $enter a dollar amount 2.How would the value of the lease liability in part b change if Bridgeport also agreed to pay the fixed annual insurance on the equipment of $2,000 at the same time as the rental payments? (Round answers to 0 decimal places, e.g. 5,275.) The lease liability ?

On January 1, 2020, Bridgeport Company contracts to lease equipment for 5 years, agreeing to make a payment of $145,088 at the beginning of each year, starting January 1, 2020. The leased equipment is to be capitalized at $605,000. The asset is to be amortized on a double-declining-balance basis, and the obligation is to be reduced on an effective-interest basis. Bridgeport’s incremental borrowing rate is 6%, and the implicit rate in the lease is 10%, which is known by Bridgeport. Title to the equipment transfers to Bridgeport at the end of the lease. The asset has an estimated useful life of 5 years and no residual value. What amounts will appear on the lessee’s December 31, 2020, balance sheet relative to the lease contract? BRIDGEPORT COMPANY Balance Sheet (Partial) December 31, 2020 Assets select an opening section name Current Assets Current Liabilities Intangible Assets Long-term Investments Noncurrent Liabilities Property, Plant and Equipment Stockholders' Equity Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity Noncurrent Assets enter an account title $enter a dollar amount Liabilities select an opening name for section one Current Assets Current Liabilities Intangible Assets Long-term Investments Noncurrent Liabilities Property, Plant and Equipment Stockholders' Equity Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity enter an account title $enter a dollar amount select an opening name for section two Current Assets Current Liabilities Expenses Intangible Assets Long-term Investments Noncurrent Liabilities Net Income / (Loss) Property, Plant and Equipment Revenues Stockholders' Equity Total Assets Total Current Assets Total Current Liabilities Total Expenses Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Revenues Total Stockholders' Equity enter an account title $enter a dollar amount 2.How would the value of the lease liability in part b change if Bridgeport also agreed to pay the fixed annual insurance on the equipment of $2,000 at the same time as the rental payments? (Round answers to 0 decimal places, e.g. 5,275.) The lease liability ?

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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Problem 21-02 b-f

What amounts will appear on the lessee’s December 31, 2020, balance sheet relative to the lease contract?

BRIDGEPORT COMPANY Balance Sheet (Partial) December 31, 2020
Assets
select an opening section name Current Assets Current Liabilities Intangible Assets Long-term Investments Noncurrent Liabilities Property, Plant and Equipment Stockholders' Equity Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity Noncurrent Assets
enter an account title		$enter a dollar amount
Liabilities
select an opening name for section one Current Assets Current Liabilities Intangible Assets Long-term Investments Noncurrent Liabilities Property, Plant and Equipment Stockholders' Equity Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity
enter an account title		$enter a dollar amount
select an opening name for section two Current Assets Current Liabilities Expenses Intangible Assets Long-term Investments Noncurrent Liabilities Net Income / (Loss) Property, Plant and Equipment Revenues Stockholders' Equity Total Assets Total Current Assets Total Current Liabilities Total Expenses Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Revenues Total Stockholders' Equity
enter an account title		$enter a dollar amount

2.How would the value of the lease liability in part b change if Bridgeport also agreed to pay the fixed annual insurance on the equipment of $2,000 at the same time as the rental payments? (Round answers to 0 decimal places, e.g. 5,275.)

The lease liability

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