Note: it asks about Green's balance sheet. See photos please. Renewable Co. uses leasing as a secondary means of selling its products. The company contracted withGreen Corporation to lease a machine with an economic life of 12 years to be used by Green Corporationin its operations. The fair value of the asset at the inception of the lease was $400,000; it cost RenewableCo. $360,000 and is carried as equipment at that value. Payments of $44,925 are to be made by GreenCorporation at the beginning of each of the eight years of the lease. Renewable Co.'s implicit interest rate is6% per year, which is not known by Green Corporation. Green Corporation's incremental borrowing rate is7%. Renewable Co. estimates the residual value of the leased asset to be $166,217 at the end of the leaseterm. The residual value is not guaranteed by Green Corporation. Renewable Co. will depreciate theequipment on a straight-line basis (assume no salvage value). b. What balances (account titles, amounts) appear on Green's balance sheet at the end of the first year,related to the lease?Note: Round your final answers to the nearest whole dollar.Balance SheetEnd of Year OneAssetsNoncurrent AssetsRight-of-Use Asset381,265 xLiabilitiesCurrent liabilitiesLease Liability44,925Noncurrent liabilitiesLease Liability381,265 x

Balance sheet refers to a summarized financial statement which showcases the balances of an…

Answered: Renewable Co. uses leasing as a…

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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Note: it asks about Green's balance sheet. See photos please.

Renewable Co. uses leasing as a secondary means of selling its products. The company contracted with
Green Corporation to lease a machine with an economic life of 12 years to be used by Green Corporation
in its operations. The fair value of the asset at the inception of the lease was $400,000; it cost Renewable
Co. $360,000 and is carried as equipment at that value. Payments of $44,925 are to be made by Green
Corporation at the beginning of each of the eight years of the lease. Renewable Co.'s implicit interest rate is
6% per year, which is not known by Green Corporation. Green Corporation's incremental borrowing rate is
7%. Renewable Co. estimates the residual value of the leased asset to be $166,217 at the end of the lease
term. The residual value is not guaranteed by Green Corporation. Renewable Co. will depreciate the
equipment on a straight-line basis (assume no salvage value).

b. What balances (account titles, amounts) appear on Green's balance sheet at the end of the first year,
related to the lease?
Note: Round your final answers to the nearest whole dollar.
Balance Sheet
End of Year One
Assets
Noncurrent Assets
Right-of-Use Asset
381,265 x
Liabilities
Current liabilities
Lease Liability
44,925
Noncurrent liabilities
Lease Liability
381,265 x

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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