On January 1, 2012, Adam Corp signed a 5-year non-cancellable lease for one (non-specialized) machine. The terms
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Question:
- On January 1, 2012, Adam Corp signed a 5-year non-cancellable lease for one (non-specialized) machine. The terms of this contract require annual payments of $9,968 at the beginning of each year beginning January 1, 2012.
There is no other direct initial cost. The present value of the lease payments is $41,565.22 and as of December 31, 2012 the interest expense is $3,159.72.
The rent payment is always $9,968
The machine has an estimated life of 6 years and a residual unguaranteed value of $5,000.
Adam's credit rate is 10%. And the landlord's implicit rate is not known.
Additionally, there is the following information:
It is requested:
- Accounting record as of January 1, 2012
- Accounting record as of December 31, 2012
- Accounting record as of January 1, 2013 for the payment of rent
Related Book For
Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain
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