Mackey Company acquired equipment on January 1 1999 through a leasing agreement

Mackey Company acquired equipment on January 1 1999
through a leasing agreement that required an annual payment of $30000. Assume that the lease has a term of five year
and that life of the equipment is also five years. The lease is treated as a capital lease and
the FMV of the equipment is $119781.
Mackey uses the straight-line method to depreciate its fixed
assets. The effective annual interest
rate on the lease is 8 percent.Required: a. Compute the
amounts that would complete the table: Balance Sheet LeaseHold Interest Depreciation Total Date Value of Equipment Obligation Expense Expense
Expense 1/1/9912/31/99 12/31/00 12/31/01 12/31/02 12/31/03 b. Compute rent expense for 1999-2003 if the lease is treated
as an operating lease.c. Compute total
expense over the 5-year period under the two methods and comment.d. How would the debt-to-equity ratio (long-term debt/total
equity) be affected by the accounting treatment (capital/operating) of the
lease?