I have a question. Please help explain a problem to me. I am having issues with lease amortization schedules and my numbers are not coming out right. Please help!! Please see below:
The following facts pertain to a non-cancelable lease agreement between Mooney Leasing and Choi Group, a lessee (amounts in thousands).
Commencement dateMay 1, 2019
Annual lease payment due at the beginning of each year, beginning with May 1, 2019¥20,471.94
Bargain purchase option price at end of lease term¥ 4,000.00
Lease term5 years
Economic life of leased equipment10 years
Fair value of asset at May 1, 2019¥91,000.00
Lessor’s implicit rate8%
Lessee’s incremental borrowing rate8%
The collectibility of the lease payments by Mooney is probable.
I need help in preparing a lease amortization schedule for Choi for the 5-year lease term.
I also need help in preparing the journal entries on the lessee’s books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2019 and 2020. Choi’s annual accounting period ends on December 31. Reversing entries are used by Choi. Thank you!