The Gripe Corporation has a single capital lease that was signed on January 1, 2001. Gripe's incremental borrowing rate is 12 percent. The lease term is 10 years, and Gripe will return the leased asset to the lessor at the end of 10 years. Gripe's December 31, 2002, balance sheet shows the following information:
Leased Asset (Net) $54,000
Amortization is calculated using the straight-line method. Assume that Gripe makes lease payments on the last day of each year.
Required:
1) Calculate the interest expense and amortization expense for the first two years of the lease and give the corresponding journal entries.
2) Calculate the value of the assets and liabilities related to the lease that appeared on Gripe's balance sheet at the end of 2001 and 2002.
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Leased Asset (Net) $54,000
Amortization is calculated using the straight-line method. Assume that Gripe makes lease payments on the last day of each year.
Required:
1) Calculate the interest expense and amortization expense for the first two years of the lease and give the corresponding journal entries.
2) Calculate the value of the assets and liabilities related to the lease that appeared on Gripe's balance sheet at the end of 2001 and 2002.
AFTER PAYMENT ENTER PASSWORD : "shiv" TO UNLOCK THE SOLUTION
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