On December 31, 20x0 an entity sells one of its assets to a leasing company and...
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On December 31, 20x0 an entity sells one of its assets to a leasing company and immediately leases it back. Fair value of asset $750,000 Asset's original cost Accumulated depreciation $1,500,000 1,100,000 8 years 8 years Lease term Economic (and useful) life of asset Residual value Interest rate implicit in the lease (known to the lessee) Lessee's incremental borrowing rate 6% 6% At the end of the lease term, the asset's ownership reverts back to the lessee. The first lease payment of $113,941 is due on December 31, 20x0. Required – For each of the following, prepare the journal entries relative to this lease transaction at December 31, 20x0 and December 31, 20x1. (a) (b) The lessee is subject to IFRS The lessee is subject to ASPE. On December 31, 20x0 an entity sells one of its assets to a leasing company and immediately leases it back. Fair value of asset $750,000 Asset's original cost Accumulated depreciation $1,500,000 1,100,000 8 years 8 years Lease term Economic (and useful) life of asset Residual value Interest rate implicit in the lease (known to the lessee) Lessee's incremental borrowing rate 6% 6% At the end of the lease term, the asset's ownership reverts back to the lessee. The first lease payment of $113,941 is due on December 31, 20x0. Required – For each of the following, prepare the journal entries relative to this lease transaction at December 31, 20x0 and December 31, 20x1. (a) (b) The lessee is subject to IFRS The lessee is subject to ASPE.
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Related Book For
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
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