Crosley Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2014. The lease
Question:
Crosley Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2014. The lease is for an 10-year period and requires equal annual payments of $34,177 at the beginning of each year. The first payment is received on January 1, 2014. Crosley had purchased the machine during 2013 for $164,000. Collectibility of lease payments is reasonably predictable, and no important uncertainties surround the amount of costs yet to be incurred by Crosley. Crosley set the annual rental to ensure an 10% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Crosley at the termination of the lease.
TABLE 6-5 PRESENT VALUE OF AN ANNUITY DUE OF 1:
Compute the amount of the lease receivable.
The amount of the lease receivable | $ |
Prepare all necessary journal entries for Crosley for 2014.
Date | Account Titles & Explanation | Debit | Credit |
1/1/14 | |||
12/31/14 | |||
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield