What amount would nic record as a leased asset

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Reference no: EM131959121

On January 1, 2016, National Insulation Corporation (NIC) leased office space under a capital lease. Lease payments are made annually.

Title does not transfer to the lessee and there is no bargain purchase option. Portions of the lessee's lease amortization schedule appear below:

Jan. 1	Payments		Effective Interest		Decrease in Balance		Outstanding Balance
2016								400,000
2016		43,000				43,000		357,000
2017		43,000		37,485		5,515		351,485
2018		43,000		36,906		6,094		345,391
2019		43,000		36,266		6,734		338,657
2020		43,000		35,559		7,441		331,216
2021		43,000		34,778		8,222		322,994
-		-		-		-		-
-		-		-		-		-
-		-		-		-		-
2033		43,000		15,751		27,249		122,764
2034		43,000		12,890		30,110		92,654
2035		43,000		9,729		33,271		59,383
2036		65,618		6,235		59,383		0

1. What is NIC's lease liability at the inception of the lease (after the first payment)?

2. What amount would NIC record as a leased asset?

3. What is the lease term in years?

4. What is the asset's residual value expected at the end of the lease term?

5. How much of the residual value is guaranteed by the lessee?

6. What is the effective annual interest rate? (Round your answer to 1 decimal place.)

7. What is the total amount of minimum lease payments?

8. What is the total effective interest expense recorded over the term of the lease?

Reference no: EM131959121

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