Manufacturers Southern leased high-tech electronic equipment from International Machines on January 1, 2021. International Machines manufactured the

Question:

Manufacturers Southern leased high-tech electronic equipment from International Machines on January 1, 2021. International Machines manufactured the equipment at a cost of $85,000. Manufacturers Southern’s fiscal year ends December 31.

Related Information:
Lease term .........................................2 years (8 quarterly periods)
Quarterly rental payments ...............$15,000 at the beginning of each period
Economic life of asset ........................2 years
Fair value of asset .............................$112,080
Implicit interest rate .............................8%

Required:
1. Show how International Machines determined the $15,000 quarterly lease payments.
2. Prepare appropriate entries for International Machines to record the lease at its beginning, January 1, 2021, and the second lease payment on April 1, 2021.

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Requirement 1 Requirement 2 January 1 2021 Lease receivablefair value present value 112080 Cost of goods sold lessors cost 85000 Sales revenue fair value present value 112080 Equipment lessors cost 85000 Cash lease payment15000 Lease receivable ...View the full answer

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Related Book For answer-question

Intermediate Accounting

ISBN: 978-1260481952

10th edition

Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas

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Question Posted: Oct 02, 2019 12:00 PM

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Manufacturers Southern leased high-tech electronic equipment from International Machines on January 1, 2021. International Machines manufactured the

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Requirement 1 Requirement 2 January 1 2021 Lease receivablefair value present value 112080 Cost of goods sold lessors cost 85000 Sales revenue fair value present value 112080 Equipment lessors cost 85000 Cash lease payment15000 Lease receivable ...View the full answer

Intermediate Accounting

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