Your answer is partially correct. Try again. The following facts pertain to a noncancelable lease ag

Your answer is partially correct. Try again. The following facts pertain to a noncancelable lease agreement between Alschuler Leasing Company and McKee Electronics, a lessee, for a computer system. Inception date October 1, 2014 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at October 1, 2014 $343,517 Residual value at end of lease term –0– Lessor’s implicit rate 12 % Lessee’s incremental borrowing rate 12 % Annual lease payment due at the beginning of each year, beginning with October 1, 2014 $74,600 The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor. The lessee assumes responsibility for all executory costs, which amount to $5,900 per year and are to be paid each October 1, beginning October 1, 2014. (This $5,900 is not included in the rental payment of $74,600.) The asset will revert to the lessor at the end of the lease term. The straight-line depreciation method is used for all equipment. The following amortization schedule has been prepared correctly for use by both the lessor and the lessee in accounting for this lease. The lease is to be accounted for properly as a capital lease by the lessee and as a direct-financing lease by the lessor. Date Annual Lease Payment/Receipt Interest (12%) on Unpaid Liability/Receivable Reduction of Lease Liability/Receivable Balance of Lease Liability/Receivable 10/01/14 $343,517 10/01/14 $74,600 $74,600 268,917 10/01/15 74,600 $32,270 42,330 226,587 10/01/16 74,600 27,190 47,410 179,177 10/01/17 74,600 21,501 53,099 126,078 10/01/18 74,600 15,129 59,471 66,607 10/01/19 74,600 7,993 66,607 –0– $447,600 $104,083 $343,517 (a) Assuming the lessee’s accounting period ends on September 30, answer the following questions with respect to this lease agreement. (Round answers to 0 decimal places e.g. 58,971.) (1) What items and amounts will appear on the lessee’s income statement for the year ending September 30, 2015? $ $ $ Depreciation Expense Interest Expense Lease Executory Expense

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