On January 1, 2024, Sheridan Ltd. leased a machine from Carla Vista Equipment Ltd. The machine had cost Carla Vista $416,500 to manufacture, and would normally have sold for about $595,000. The lease was for 10 years and requires equal monthly payments of $6,490, which reflects an annual interest rate of 8%. While the machine is expected to have a total useful life of 12 years, Sheridan’s management plans to return it to Carla Vista at the end of the 10-year lease. Sheridan’s management has also determined that the present value of the minimum lease payments was $534,915 at the time the lease was entered into. A.Calculate the impact that the lease will have in the first month on Sheridan’s statement of financial position. (Round answers to 0 decimal places, e.g. 125.) Right-of-use asset at the end of January. $______:1 Lease liability at the end of January $______:1 B. Calculate the impact that the lease will have in the first month on Sheridan’s statement of income. (Round answers to 0 decimal places, e.g. 125.) Depreciation expense $______:1 Interest expense $______:1
On January 1, 2024, Sheridan Ltd. leased a machine from Carla Vista Equipment Ltd. The machine had cost Carla Vista $416,500 to manufacture, and would normally have sold for about $595,000. The lease was for 10 years and requires equal monthly payments of $6,490, which reflects an annual interest rate of 8%. While the machine is expected to have a total useful life of 12 years, Sheridan’s management plans to return it to Carla Vista at the end of the 10-year lease. Sheridan’s management has also determined that the present value of the minimum lease payments was $534,915 at the time the lease was entered into.
A.Calculate the impact that the lease will have in the first month on Sheridan’s
Right-of-use asset at the end of January. $______:1
Lease liability at the end of January $______:1
B. Calculate the impact that the lease will have in the first month on Sheridan’s statement of income. (Round answers to 0 decimal places, e.g. 125.)
Interest expense $______:1
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