Werner Chemical, Inc., leased a protein analyzer on September 30, 2016. The five

Question

Werner Chemical, Inc., leased a protein analyzer on September 30, 2016. The five-year lease agreement calls for Werner to make quarterly lease payments of $371,971, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2016. Werner's incremental borrowing rate is 12%. Depreciation is recorded on a straight-line basis at the end of each fiscal year. The useful life of the equipment is five years. (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.)

Determine the present value of the lease payments at September 30, 2016.

2. What amounts related to the lease would Werner report in its balance sheet at December 31, 2016 (ignore taxes)?

liability:
assett:

3. What amounts related to the lease would Werner report in its income statement for the year ended December 31, 2016 (ignore taxes)?

total expenses:

4.What amounts related to the lease would Werner report in its statement of cash flows for the year ended December 31, 2016 (ignore taxes)?

Werner Chemical, Inc., leased a protein analyzer on September 30, 2016. The five-year lease agreement calls for Werner to make quarterly lease payments of $371,971, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2016. Werner's incremental borrowing rate is 12%. Depreciation is recorded on a straight-line basis at the end of each fiscal year. The useful life of the equipment is five years. (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.)

Explanation / Answer

Answer:1 PV(0.12/4,5*4,371971,1,1) =$5700009

Present value of lease payments $5,700000.

Answer:2

Answer:3

Answer:4

Increase in Lease Receivable    (5,700,000)       30-Sep

Decrease in Lease Receivable 371971    30-Sep

Decrease in Lease Receivable 212130    31-Dec

PMT Interest PMT on Principle Balance 5,700,000 371971 371971 5,328,029 371971 159841 212130 5,115,899 371971 153477 218494 4,897,405 371971 146922 225049 4,672,356 Lease Receivable 5,700,000 30-Sep Less: Payment 371971 30-Sep Less: Payment 212130 31-Dec Lease receivable 5,115,899 31-Dec-16

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