Question

Wadkins Company, a machinery dealer, leased a machine to Aoki Corporation on January 1, 2011. The lease is for an 8-year period and requires equal annual payments of ¥38,514,000 at the beginning of each year. The first payment is received on January 1, 2011. Wadkins had purchased the machine during 2010 for ¥170,000,000. Wadkins set the annual rental to ensure an 11% rate of return. The machine has an economic life of 8 years with no residual value and reverts to Wadkins at the termination of the lease.

Instructions
(a) Compute the amount of the lease receivable.
(b) Prepare all necessary journal entries for Wadkins for 2011.



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  • CreatedJune 17, 2013
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