On January 1, Year 1, Marco Company leased equipment from Wilson Corp. Lease payments of $200,000...

 

Transcribed Image Text:

On January 1, Year 1, Marco Company leased equipment from Wilson Corp. Lease payments of $200,000 are to be made every January 1 for 10 years. Title does not pass at the end of the lease term, and the lease does not include a bargain purchase option. The lease is non- cancelable. Additional Facts: 0 • • The lease includes a guaranteed residual value of $40,000. The estimated useful life of the equipment on January 1, Year 1, is 25 years. The rate implicit in the lease is unknown to Marco. Marco's incremental borrowing rate is 8%. The fair value of the equipment is $1,800,000 on January 1, Year 1. 1. Record the journal entries for Marco on January 1, Year 1. 2. Record the journal entries for Marco on January 1, Year 2. (ignore end-of-year accruals) 3. Record the journal entries for Marco on January 1, Year 3. (ignore end-of-year accruals) On January 1, Year 1, Marco Company leased equipment from Wilson Corp. Lease payments of $200,000 are to be made every January 1 for 10 years. Title does not pass at the end of the lease term, and the lease does not include a bargain purchase option. The lease is non- cancelable. Additional Facts: 0 • • The lease includes a guaranteed residual value of $40,000. The estimated useful life of the equipment on January 1, Year 1, is 25 years. The rate implicit in the lease is unknown to Marco. Marco's incremental borrowing rate is 8%. The fair value of the equipment is $1,800,000 on January 1, Year 1. 1. Record the journal entries for Marco on January 1, Year 1. 2. Record the journal entries for Marco on January 1, Year 2. (ignore end-of-year accruals) 3. Record the journal entries for Marco on January 1, Year 3. (ignore end-of-year accruals)

Answer rating: 100% (QA)

To record the journal entries for Marco Company on January 1 Year 1 Year 2 and Year 3 we will need t... View the full answer