Business Administration 2257 Study Guide - Final Guide: Automobilclub Von Deutschland

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Step 1: put the lease on the books. Value of 1 lease payment * (1 + pv of an annuity factor) n = # of years 1 i = implied interest rate. Cr accumulated depreciation (o/b of asset/lease life*(n/12), where n=the number of months from the date the lease was signed until fiscal year end) T/b of obligation*interest rate*(n/12), where n=the number of months from the date the lease payment was made until fiscal year end. Dr obligation under finance lease (cash interest payable) Dr interest expense (o/b of obligation*interest rate*(n/12), where n= the number of months since fyb until the lease payment) disbursements) Note: if the lease payment is made at the beginning of the fiscal year interest expense will not exist, skip this account. Dr obligation under finance lease (value of 1 lease payment) Cr cash (value of 1 lease payment, given or on cash. Cr obligation under finance lease (amount from did amount from should)