E21.

16 (LO 2, 4) (Lessee Accounting, Initial Direct Costs) Rauch AG leases a piece of

equipment to Donahue SA on January 1, 2022. The lease agreement called for annual rental
payments of €4,892 at the beginning of each year of the 4- year lease. The equipment has an
economic useful life of 6 years, a fair value of €25,000, and a book value of €20,000. Both
parties expect a residual value of €8,250 at the end of the lease term, though this amount is not
guaranteed. Rauch set the lease payments with the intent of earning a 5% return, and Donahue
is aware of this rate. There is no bargain purchase option, ownership of the lease does not
transfer at the end of the lease term, and the asset is not of a specialized nature.
Instructions
a. Prepare the lease amortization schedule(s) for Donahue for all 4 years of the lease.
b. Prepare the journal entries for Donahue for 2022 and 2023.
c. Suppose Donahue incurs initial direct costs of €750 related to the lease. Prepare the
journal entries for 2022.
d. Explain how a fully guaranteed residual value by Donahue would change the
accounting for the company. The expected residual value is €8,250.
e. Explain how a bargain renewal option for one extra year at the end of the lease term
would change the accounting of the lease for Donahue.

JAWAB :

a. Annual rental payment €4,892

PV 3.72325 x
€18,214
DONAHUE SA
Jadwal Amortisasi Sewa
Dasar utang tahunan

Pembayaran Pengurangan Kewajiban

Tanggal Bunga (8%)
Tahunan kewajiban sewa sewa
1/1/2022 - - - 18,214
1/1/2022 4,892 0 4,892 13,322
1/1/2023 4,892 666 4,226 9,096
1/1/2024 4,892 455 4,437 4,659
 1/1/2025 4,892 233 4,659 -

b. 1/1/2022
Right of use asset €18,214
Kewajiban Sewa €18,214
Kewajiban sewa €4,892
Kas €4,892

12/31/2022
Beban bunga €666
Kewajiban Sewa €666
Beban penyusutan €4,554
Right of use asset (18,214 : 4) €4,554

1/1/2023
Kewajiban sewa €4,892
Kas €4,892

12/31/2023
Beban bunga €455
Kewajiban sewa €455