Financial Accounting Assignment - Lease Amortization Schedule and Financial Statements

2021 Fall Financial Accounting Assignment

Instructions. Answer each of the following requirements. Show your work(How you reach out the result).

Requirement.

XYZ Corp., as lessee, entered into a noncancellable lease

on Jan 1, 20x1, under which it will lease equipment for five years having an economic life of six years. The equipment reverts to the lessor at the end of the lease term. The lease requires annual payments of $10,000, net of executory costs, beginning on Jan 1, 20x1. XYZ’s incremental borrowing rate is 9%. XYZ follows US GAAP. Required: (a) Prepare a combined schedule to compute (1) the capitalized cost of the lease at its inception, and (2) straight-line amortization for 20x1 (b) Compute interest expense for 20x1 and 20x2. An amortization schedule for the first two years is recommended. Circle all final answers.

Use this space or the white space below to show your work including calculation.

Depreciation Expense - $8,480

Interest Expense, 20X1 - $2,916

Requestion 4. Shown in Table 1 is a listing of account balances of ABC Corp. taken from its pre-closing trial balance as of and for the period ending December 31, 20x1. Account balances are listed in alphabetical order. Credit balances are shown in brackets. Observe that two opening balances as of Jan 1, 20x1 are shown in Table 1: a balance for Retained Earnings and a balance for Accumulated Other Comprehensive Income.

Required: using the information in Table 1, prepare in proper form the financial statements indicated below for ABC Corp. as of or for the period ended Dec 31, 20x1.

1. Income Statement (single step). (You need not prepare a separate statement of comprehensive income.)
2. Statement of Retained Earnings
3. Statement of Accumulated Other Comprehensive Income.
4. Balance Sheet

Check figures

Net income $60

Total Assets $850

Ending balance, Accumulated Other Comprehensive Income, credit balance $30