Answer:
a. FV of Lease Payment=2215552
b. Debit Credit
Recognition of Lease
01-Jul-19 ROU Asset $2215560
Lease Liability $2215560
30-Jun-20 Recording Lease Payment
Lease Liability $225000
Lease Expense $25000
Bank $250000
30-Jun-20 Recording Interest
Interest Expense $199056
Lease Liability $199056
c. Debit Credit
Recognition of Lease
Lease Receivable $2215560
ROU Asset $2215560
30-Jun-20 Recording Lease receipt
Bank $250000
Fisher Ltd $25000
Lease Receivable $225000
30-Jun-20 Maintainace Expense
Lease Expense$25000
Bank $25000
Fisher Ltd $25000
Lease Expense $25000
30-Jun-20 Recording Interest
Lease Receivable $199056
Interest Expense $199056
Explanation:
According to the given data Interest rate implict in the lease = 10%
Year Lease Discounting PV of Lease Payment
Factor 10%
0 300000 1.0000 300000
1 225000 0.9091 204545
2 225000 0.8264 185950
3 225000 0.7513 169046
4 225000 0.6830 153678
5 225000 0.6209 139707
6 225000 0.5645 127007
7 225000 0.5132 115461
8 225000 0.4665 104964
9 225000 0.4241 95422
10 225000 0.3855 86747
11 225000 0.3505 78861
12 225000 0.3186 71692
13 225000 0.2897 65174
14 225000 0.2633 59250
15 225000 0.2394 53863
16 225000 0.2176 48967
17 225000 0.1978 44515
18 225000 0.1799 40468
19 225000 0.1635 36789
20 225000 0.1486 33445
a. FV of Lease Payment=2215552
b. Journal Entry In the books of Fisher Ltd.
Debit Credit
Recognition of Lease
01-Jul-19 ROU Asset $2215560
Lease Liability $2215560
30-Jun-20 Recording Lease Payment
Lease Liability $225000
Lease Expense $25000
Bank $250000
30-Jun-20 Recording Interest
Interest Expense $199056
Lease Liability $199056
c.Journal Entry
Debit Credit
Recognition of Lease
Lease Receivable $2215560
ROU Asset $2215560
30-Jun-20 Recording Lease receipt
Bank $250000
Fisher Ltd $25000
Lease Receivable $225000
30-Jun-20 Maintainace Expense
Lease Expense$25000
Bank $25000
Fisher Ltd $25000
Lease Expense $25000
30-Jun-20 Recording Interest
Lease Receivable $199056
Interest Expense $199056
