These are the only instructions that I need help to solve in accounting. **Lease Accounting Educational Module****Scenario:**The lessee is aware that the lessor uses an implicit rate of 4%.**Instructions:**1. **Indicate the type of lease ABC has entered into.**2. **Prepare the journal entries on ABC’s books related to the lease agreement for the following dates:** - (Round all amounts to the nearest dollar. Include a partial amortization schedule.) a. January 1, 2017 b. December 31, 2017 c. January 1, 2018 This module guides you through the process of recognizing and recording lease transactions in accordance with accounting principles, illustrating the application of an implicit interest rate and the preparation of related journal entries. ABC Company, as lessee, enters into a lease agreement on January 1, 2017, to lease equipment.The following data are relevant to the lease agreement:- The term of the non-cancelable lease is three years, with no renewal option.- Payments of $16,000 are due on January 1 of each year.- The fair value of the equipment on January 1, 2017, is $50,000. The equipment has an estimated economic life of five years, and an estimated residual value of $0.- The equipment reverts back to the lessor at the termination of the lease and is expected to have use to the lessor.

ABC has entered into Capital Lease. Since the present value (PV) of the minimum lease payments and lessee's guarantee of residual value is required. Therefore it is Capital lease. Year Annual lease installments PV factor 4% PV of lease payments Amortization Of PV of lease payments 0 76,000 1 76,000 73,114.3 1 76,000 0.9615 73,076.92 73,114.3 2 76,000 0.9245 70,266.27 73,114.3 228,000 219,343.2 Interest expense for year 1 : (219,343.2 - 76,000) × 4% = 5733.72 Interest expense for year 2: (143,343.2 - 70,266.2) × 4% = 2923.08Jan1, 2017 Right-of-use assets dr. 219,343.2 To lease liability 219,343.2 Jan1, 2017 Lease liability dr. 76,000 To cash 76,000 December 31, 2017 Interest expense dr. 5733.72 To lease liability. 5733.72 December 31, 2017 Amortization exp. Dr 73,114.3 To right of use asset. 73,114.3 January 1, 2018 Lease liability dr. 76,000 To cash 76,000

Business

Accounting

The lessee is aware that the lessor used an implicit rate of 4% Instructions 1. Indicate the type of tease ABC has entered into Prepare the Journial entries on ABCS books related to the lease 9greement for Inthe following dates: (round all amounts to the nearest dollar. Inclyde a Partial 9mortization schedule) 9. January I, 20IT bi December 31, 2017 6 Janyary I 2018

The lessee is aware that the lessor used an implicit rate of 4% Instructions 1. Indicate the type of tease ABC has entered into Prepare the Journial entries on ABCS books related to the lease 9greement for Inthe following dates: (round all amounts to the nearest dollar. Inclyde a Partial 9mortization schedule) 9. January I, 20IT bi December 31, 2017 6 Janyary I 2018

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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