On January 1 of Year 1, Cane Company signed a five-year lease contract for equipment with Abel
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On January 1 of Year 1, Cane Company signed a five-year lease contract for equipment with Abel Company. The equipment had a normal selling price of $27,500 and an estimated useful life of six years. Five annual payments of $5,908 are payable by Abel on each January 1, beginning at the lease commencement. The asset reverts to Cane at the end of the lease term. Cane’s implicit interest rate is 6%, which is known to Abel. Abel also paid legal fees in the execution of the lease of $900 on January 1 of Year 1, and the equipment is estimated to have an unguaranteed residual value of $1,500 at the end of the lease.
Related Book For
Intermediate Accounting Reporting and Analysis
ISBN: 978-1285453828
2nd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
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