Argyle Ltd$.$ signed a $60-$month lease to rent a new computer for $$170$ per month. The fair value of the computer is $$4,300.$ The lease

will commence on $1$ November $20$X$1$ with payments beginning immediately. Assume that Argyle Ltd$.\text{'}$s IBR is $0\mathrm{.}7\%$ per month. Argyle is

unaware of the implicit rate in the lease. $($PV of $$1,$ PVA of $$1,$ and PVAD of $$1.)($Use appropriate factor$($s$)$ from the tables provided.$)$

Required:

$1-$a$.$ Is Argyle Ltd$.$ able to account for this lease as a low$-$value lease?

Yes

No

$1-$b$.$ What journal entry would be recorded for this lease? $($If no entry is required for a transaction$/$event$,$ select $"$No journal entry

required" in the first account field.$)$

Journal entry worksheet

A

Pass journal entry for this lease.

Note: Enter debits before credits.

$2-$a$.$ Argyle Ltd$.$ is able to find a used computer for $$140$ per month instead of having to pay $$170$ per month. The fair value of the asset

in its current condition is $$3,200$ but when new, the computer costs slightly over $$5,800.$ Is Argyle Ltd$.$ able to account for this lease as

a low$-$value lease?

Yes

No

$2-$b$.$ What journal entry would be recorded for this lease? $($If no entry is required for a transaction$/$event$,$ select $"$No journal entry

required" in the first account field. Round your final answers to the nearest whole dollar amount.$)$

Journal entry worksheet

A

Record the lease asset and lease liability.

Note: Enter debits before credits.