Franklin Co. leased its manufactured equipment to Parker Inc. for a 4-year term. Franklin Co. reported a
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Franklin Co. leased its manufactured equipment to Parker Inc. for a 4-year term. Franklin Co. reported a book value of $110,000 for the equipment in its inventory account. The lease commenced on January 1, 2020, with the first annual payment of $37,000 due immediately. The equipment has a useful life of 4 years, an estimated fair value of $137,760, and no residual or salvage value. The implicit rate of the lease is 5% and collectibility of the lease payments from Parker is probable. Record Franklin’s journal entries at the commencement of the sales-type lease.
- Note: Round your answers to the nearest whole dollar.
- Note: List multiple debits or credits (when applicable) in alphabetical order
Date | Account Name | Dr. | Cr. |
Jan. 1, 2020 | |||
To derecognize asset and record investment lease | |||
Jan 1, 2020 | |||
To record cash lease payment |
Related Book For
Cost Accounting Foundations and Evolutions
ISBN: 978-1111626822
8th Edition
Authors: Michael R. Kinney, Cecily A. Raiborn
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