Write a memo to the “Toys R U Audit File.” Be sure to include the following: 1. Brief description of current reporting rules for leases 2. Description of proposed reporting rules for leases 3. Example of application of proposed rules for a lessee a. Assume the following lease terms: i. Identifiable Asset: Facility (building) lease ii. Term 10 years – assume no renewal option iii. Monthly lease payments beginning at $125,000 per month over the ten year lease term iv. The risk free rate is 2%, Toys R U borrows at an incremental rate of 6%, and the lessor rate is unavailable v. Assume the lease commences on January 1, 2021 and the first payment is due February 1, 2021 4. Include the following journal entries: a. Recording of lease related asset and liability at lease inception – use “Capitalized Lease Asset” and “Capitalized Lease Liability” as account titles b. Recording of the monthly expense for the first two months – do each month separately 5. Attach an Excel worksheet to your memo with the following: i. Calculation of the amount of the capitalized lease asset and related lease liability ii. An amortization schedule for the lease term

Accounting homework help


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