Assume that Lenovo (CHN) leased equipment that was carried at a cost of $150,000 to Sharon Swander Company. The term of the lease is 6 years beginning January 1, 2011, with equal rental payments of $30,044 at the beginning of each year. All executory costs are paid by Swander directly to third parties. The fair value of the equipment at the inception of the lease is $150,000. The equipment has a useful life of 6 years with no residual value. The lease has an implicit interest rate of 8%, no bargain-purchase option, and no transfer of title. Prepare Lenovo’s January 1, 2011, journal entries at the inception of the lease.
Answer to relevant QuestionsUse the information for Lenovo from BE21-6. Assume the direct-financing lease was recorded at a present value of $150,000. In BE21-6, Assume that Lenovo (CHN) leased equipment that was carried at a cost of $150,000 to Sharon ...Jacobsen Leasing Company leases a new machine that has a cost and fair value of $75,000 to K. J. Choi Corporation on a 3-year non-cancelable contract. K. J. Choi Corporation agrees to assume all risks of normal ownership, ...Moonstruck Company manufactures a reservation system with an estimated economic life of 12 years and leases it to National Airlines for a period of 10 years. The normal selling price of the equipment is $278,072, and its ...Define a change in estimate and provide an illustration.Palmer Co. is evaluating the appropriate accounting for the following items. 1. Management has decided to switch from the FIFO inventory valuation method to the average cost inventory valuation method for all inventories.2. ...
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