Rauch AG leases a piece of equipment to Donahue SA on January 1, 2019. The lease agreement
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Instructions
a. Prepare the lease amortization schedule(s) for Donahue for all 4 years of the lease.
b. Prepare the journal entries for Donahue for 2019 and 2020.
c. Suppose Donahue incurs initial direct costs of €750 related to the lease. Prepare the journal entries for 2019.
d. Explain how a fully guaranteed residual value by Donahue would change the accounting for the company. The expected residual value is €9,000.
e. Explain how a bargain renewal option for one extra year at the end of the lease term would change the accounting of the lease for Donahue.
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Related Book For
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
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