On April 1,2018,Helo Company Entered into a Five-Year Lease for Equipment.Annual

question 65

Essay

On April 1,2018,Helo Company entered into a five-year lease for equipment.Annual lease payments are $15,000,payable at the beginning of each lease year (April 1).At the end of the lease,possession of the equipment will revert to the lessor.The equipment has an expected useful life of 5 years.Similar equipment could be purchased for $250,000 cash.Helo's incremental borrowing rate is 12%.The company has a March 31 year-end,and it uses straight-line depreciation for its property,plant,and equipment.
Required:
a.Prepare the journal entries relating to the lease and leased asset for Helo's fiscal year ending March 31,2019.
b.State the amounts related to the lease that would be reported on the March 31,2019 balance sheet,indicating the balance sheet classifications,account names,and amounts.

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Definitions:

Virginia Company

A joint-stock company chartered by James I of England in 1606 to establish settlements on the coast of North America.

Massachusetts Company

An English stock company chartered in 1629 for the colonization of Massachusetts Bay in New England and played a central role in the settlement of the region by Puritans.

Spanish Empire

Was one of the largest empires in world history, spanning the Americas, parts of Asia, Africa, and Europe, characterized by its vast territories and colonial wealth from the 16th to the 19th centuries.