In: Accounting
n January? 1, 2016 to rent
HoritzonHoritzon
Winery the equipment that
HoritzonHoritzon
requires to expand its production capacity to meet? customers' demands for its products. The lease agreement calls for five annual lease payments of
$ 110 000$110 000
at the end of each year.
HoritzonHoritzon
has identified this as a finance lease.? Furthermore, the company has determined that the present value of the lease? payments, discounted at
12 %12%?,
is
$ 396 525$396 525.
The leased equipment has an estimated useful life of five years and no residual value.
HoritzonHoritzon
uses the? straight-line method for depreciating similar equipment that it owns.
Requirements
a. Prepare a lease amortization schedule for this lease.
b. Prepare the necessary journal entries for the first year of the lease.
c.
Use the student to show work button to answer the following questions. Justify the journal entry to raise the lease. Justify the calculation of depreciation.