Question

On January 1, 2021, Miller Company leased equipment from Alpha Louse Corp. Alphe Lease Corp purchased the equipment at a cost of $150.000. The agreement specified three
payments of $50,000 beginning January 1, 2021, the beginning of the lense, and on each December 31 thereafter through 2022. The useful life of the equipment is estimated to be five years wor's
implicit rate was 5%. The present value of those three payments at a discount rate of % is $142,971,
On January 1, 2022 (after one year and two payments), Miller and Alpha agreed to extend the lease term by two years and lease payments stay to be $50,000. The market rate of interest that the
was 5%. The present value of these remaining three payments at a discount rate of 5% is $136,163,
Answer the following questions:
(Do not add dollar sign, do not add comma by yourself to your amount, round the answer to the whole number)
1. What is the amount related to the lease that Miller will report in its income statement for the year ended December 31, 2021 dgnore income taxes)
2. What is the balance of lease liability that Miller will report in its balance sheet at December 31, 2021
3. What is the balance of right of use asset that Miller will report in its balance sheet at December 31, 2021
4 What is the amount related to the bonds that Miller will report in its statement of cash flows for the year ended December 31, 2021 Indicate the category in which to classify cashflows
____<(amount),_____activities,____activities at,_____amount
5 What is the impact of lease contract on Alpha 2022 net income?
6. (bonus question additional 10 points) What is the amount of amortization expense reported on Miller income statement for the year ended December 31, 2022

please show all work and only answer 5 and 6

Answer 1

5. The lease contract will reduce alpha 2022 net income due to increase in amortization expense.

6. 6,808 is the amortization expenses reported on Miller income statement for y e. December 31, 2020

Original		interest	instalment	principal	outstanding principal
01-01-2021	142971		50000	50000	92971
01-01-2021		4,649	50000	45,351	47,620
01-01-2022		2,381	50000	47,620	-
Revised
	Opening o/s.	interest	instalment	principal	outstanding principal
01-01-2022	136163	6,808	50000	43,192	92,971