Regina Corporation, which uses ASPE, manufactures replicators. On May 29, 2014, it leased to Barnes Limited a

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Regina Corporation, which uses ASPE, manufactures replicators. On May 29, 2014, it leased to Barnes Limited a replicator that cost $265,000 to manufacture and usually sells for $410,000. The lease agreement covers the replicator's five-year useful life and requires five equal annual rentals of $95,930 each, beginning May 29, 2014. The equipment reverts to Regina at the end of the lease, at which time it is expected that the replicator will have a residual value of $40,000, which has been guaranteed by Barnes, the lessee. An interest rate of 12% is implicit in the lease agreement. Collectibility of the rentals is reasonably assured, and there are no important uncertainties concerning costs. Prepare Regina's May 29, 2014 journal entries.
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Intermediate Accounting

ISBN: 978-1118300855

10th Canadian Edition Volume 2

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Nicola M. Young, Irene M. Wiecek, Bruce J. McConomy

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