Please review the recent revision on the US lease accounting policy. The revised lease accounting policy classifies
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Please review the recent revision on the US lease accounting policy.
The revised lease accounting policy classifies all leases over 12 months into two types: operating vs. finance.
Python Company leased equipment from Hope Leasing on January 1, 2021. Hope recently purchased the equipment at a cost of $222,664.
Other information:
Lease term 3 years, finance lease
Annual payments $80,000 on January 1 each year
Life of asset 3 years
Fair value of asset $222,664
Implicit interest rate 8%
Incremental rate 8%
There is no expected residual value.
Required: Prepare appropriate journal entries for Python for 2021. Assume straight-line depreciation and a December 31 year-end. Round your answers to the nearest whole dollar amounts.
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