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Financial Statement Reporting for an Operating Lease Harmeling Paint Ball (HPB) Corporation needs a new air...

Financial Statement Reporting for an Operating Lease

Harmeling Paint Ball (HPB) Corporation needs a new air compressor that costs $80,000. HPB will need it for only 4 years even though the compressor's economic life is long enough so that the lease is an operating lease. The firm can lease the compressor for 4 years with $15,000 lease payments at the end of each year. HPB's cost of debt is 11%. Answer the following questions. (Hint: See Table 19-1.)

  1. What is the initial lease liability that must be reported on the balance sheet? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value.

    $_____  

  2. What is the initial right-of-use asset? Do not round intermediate calculations. Round your answer to the nearest cent.

    $______  

  3. What will HPB report as the Year-1 lease expense? Round your answer to the nearest cent. Enter your answer as a positive value.

    $_____  

  4. What is the Year-1 imputed interest expense? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value.

    $_____  

  5. What lease liability must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value.

    $_____  

  6. What right-of-use asset must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent.

    $_____  

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