On June 30, 2024, Blue, Incorporated leased a machine from Big Leasing Corporation. The lease agreement qualifies as a finance lease and calls for Blue to make semiannual lease payments of $231,346 over a four-year lease term, payable each June 30 and December 31, with the first payment on June 30, 2024. Blue's incremental borrowing rate is 10%, the same rate Big uses to calculate lease payment amounts. The lease agreement qualifies as a finance lease. Amortization is recorded on a straight-line basis at the end of each year. Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) Required: 1. Determine the present value of the lease payments on June 30, 2024, that Blue uses to record the right-of-use asset and lease liability. 2. What would be the amounts related to the lease that Blue would report in its balance sheet at December 31, 2024? (Ignore taxes.) 3. What would be the amounts related to the lease that Blue would report in its income statement for the year ended December 31, 2024? (Ignore taxes.) Note: For all requirements, round your intermediate and final answers to the nearest whole dollar amounts. 1. Present value 2. Right-of-use asset 2. Lease liability 3. Total expenses
On June 30, 2024, Blue, Incorporated leased a machine from Big Leasing Corporation. The lease agreement qualifies as a finance lease and calls for Blue to make semiannual lease payments of $231,346 over a four-year lease term, payable each June 30 and December 31, with the first payment on June 30, 2024. Blue's incremental borrowing rate is 10%, the same rate Big uses to calculate lease payment amounts. The lease agreement qualifies as a finance lease. Amortization is recorded on a straight-line basis at the end of each year. Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) Required: 1. Determine the present value of the lease payments on June 30, 2024, that Blue uses to record the right-of-use asset and lease liability. 2. What would be the amounts related to the lease that Blue would report in its balance sheet at December 31, 2024? (Ignore taxes.) 3. What would be the amounts related to the lease that Blue would report in its income statement for the year ended December 31, 2024? (Ignore taxes.) Note: For all requirements, round your intermediate and final answers to the nearest whole dollar amounts. 1. Present value 2. Right-of-use asset 2. Lease liability 3. Total expenses
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On June 30, 2024, Blue, Incorporated leased a machine from Big Leasing Corporation. The lease agreement qualifies as a finance
lease and calls for Blue to make semiannual lease payments of $231,346 over a four-year lease term, payable each June 30 and
December 31, with the first payment on June 30, 2024. Blue's incremental borrowing rate is 10%, the same rate Big uses to calculate
lease payment amounts.
The lease agreement qualifies as a finance lease. Amortization is recorded on a straight-line basis at the end of each year.
Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1)
Required:
1. Determine the present value of the lease payments on June 30, 2024, that Blue uses to record the right-of-use asset and lease
liability.
2. What would be the amounts related to the lease that Blue would report in its balance sheet at December 31, 2024? (Ignore
taxes.)
3. What would be the amounts related to the lease that Blue would report in its income statement for the year ended December 31,
2024? (Ignore taxes.)
Note: For all requirements, round your intermediate and final answers to the nearest whole dollar amounts.
1. Present value
2. Right-of-use asset
2. Lease liability
3. Total expenses
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