Question

Federated Fabrications leased a tooling machine on January 1, 2021, for a three-year period ending December 31, 2023. 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 2022. The company had the option to purchase the machine on December 30, 2023, 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 $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (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 pattern 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. 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 liability < Required 1 Required 2 >

Answer 1

Requirement (1) Federated fabricatious leased a tooling me on 01/01/20 Mere: Down Payment : $36000 Dono i clife of Machine Gyea Implicite rate : 10% (known as Discounter Rate & Amount to be the recorded as a right to use. as per below Colccilation to -Period/Pate $A P. V. factor Amount (AXB) e ol-01-2021 36000 86000 31-12-2021 0.909 36000 6.826 31-12-2022 31-12-2023 29736 27036 36000 0.751 31-12-2023 45000 0.751 33795 126567 Hence as Amout $ 126567 will be recorded right to use. # /p.v. farkos a. Praesent Valve desty P.TO

Requlomat Federated fabrications leased a machine Detail s | Heregte m s $ 36 . b like села given implicit rate 10%. G that is disconting Rate Interst rate as a (tablety * Calculation of Amount to be recorded right to we and minimum (ease gears Docon painut 01/01/2021 36000 311122041 .909 31/12/2012 36000 826. 36000751 Discount ered りられます 29736 - | زامد [1] د بدلال)Pes usooo 751 33795 126,567 PART T Repusnet Date Payment Intest - outstander Decrese 36000 Bournee 90567 31|14/2021 31/121 122 31/12/2023 31/12/2023 36000 36000 45000 18113 7268 17887 28732 43948 72680 43948

Dato Page Jon ol 2021 Right to we Aset leage Payable 126567 o 126567 Janiol 2021 lease payable To Cast 3500 26000 31/12/2011 Amortization Exleses Dr. To Right to use - 21895 21095 [126567 x yeus) 31/12/2009 Intent lease Experses Al Dr 18,113 payebie pr 17887 To cash atme 36000 31/12/2022 Amotzation salescs ar To Right to use 21095 21095, 31/12/2023 Intest Exfeses or 7268 lease payable or 28732 To cosR 36000 31/12/2023 Amortisation expose or To Right to use 21095 21095