Question

Check my work Federated Fabrications leased a tooling machine on January 1, 2018, for a three-year period ending December 31, 2020. The lease agreement specified annual payments of $36,000 beginning with the first payment at the beginning of the lease, and each December 31 through 2019. The company had the option to purchase the machine on December 30, 2020, for $45,000 when its fair value was expected to be $60.000 a sufficient difference that exercise seems reasonably certain. The machine's estimated useful life was six years with no salvage value. Federated was aware that the lessor's implicit rate of return was 10%. (FV of $1. PV of 51. FVA of 51. PVA of $1. FVAD of S1 and PVAD of S1) (Use appropriate factor(s) from the tables provided.) " Required: 1. Calculate the amount Federated should record as a right-of-use asset and lease liability for this finance lease. 2. Prepare an amortization schedule that describes the patter of interest expense for Federated over the lease term. 3. Prepare the appropriate entries for Federated from the beginning of the lease through the end of the lease term. 19 Complete this question by entering your answers in the tabs Below. Required 1 Required 2 Required 3 Calculate the amount Federated should record as a right-of-use asset and lease liability for this finance lease. (Round your intermediate and final answer to the nearest whole dollar amount.) Right-of-use asset and lease ability RE Required 2 >

Answer 1

Required- 3 132,288 323 and Lease Liabil;G Right use Asset 98,4 79 2-73554 3 payments es/ = 3380) At periad s క 2.735SY tO.0907 t032645 $132288 Lstuk IYear en year end Scanned with CS CamScanner

Regaired- Date EStechive Inteses l payments utstonAir Dalance Decrease in Balance elo 7 h2e1s $ 1/32,223 di12a18 $36,000 96,282 36,000 9627 $69917 $ 36,000 23112013 $ 26,37) G992 $29,008 36,00 0 ५०,१० १ 20/9 40 909 4,191 uso00 2020 nned with CamScanner |C 3 २०2०

Reguired -3 General Tourna Date Debit Sredit 3 1,32,288 #23,313 Use asset Jan ol.20 Lease pay ae Being Fill amaunt secanised at inception Lease $132,288 H23,323 Lease payable Cash Jan ol 20)g 36,c00 2 436000 Beirp Sirst le ase Payment made at Incephion e Lease) Amosbi sabion Eap Dec. 31. 2) $22048 3. Right fuse asS el 322042 L Being amosti satian Exp Amorbisabian Exp 322 83 Since asset usefsl life is siars Interest Expense Dec 31. 2019 $9629 26,37/ Lease pay able $36,000 Cash LBeing amourt paid at Year end of *36000 yelated to Inkerest Expense amd Lease payade 5- Dec 31. 2019 224 Amostisab'an Expense Right of use asset 22,0 48 Being Arnorisaben p for 2nd Year7 Scanned with CS CamScanner

6992 1nterest payable Lease payable December 3), 29003 2017 Cash $36,000 Eeing Ameunt patd at 2 Year elated to Interest and rincipal $34,000 $ 22048 Amort saban Ex pense December 7- 31 2020 Right use asset 22042 Being Amesbsaban Epense hr 3ear charged Right to use asset e December 31, Interest 4419) Ex pense 2020 Lease payade $40.909 Cash $45000 Being amont Yea'r end inclu ded nterest patd at sd expense and purchase of machine Jbes Scanned with CS CamScanner