Box Ltd (lessee) entered into a lease with GEC Ltd (lessor) to obtain the services of a
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Question:
Box Ltd (lessee) entered into a lease with GEC Ltd (lessor) to obtain the services of a forklift truck. The term of the lease is four years and, in return, Box Ltd has agreed to make an initial payment of $4000 followed by 47 monthly payments of $2000. The rate of interest charged by the lessor is found to be 1% per month, and the lessor acquired the forklift truck for $78 707. GEC Ltd classifies the lease as a finance lease.
Required
(a) Record the lease of the forklift truck, including the initial payment of $4000 and the first lease installment of $2000, in the books of the lessor.
- (b) Record the lease of the forklift truck, including the initial payment of $4000 and the first lease installment of $2000, in the books of the lessee.
Related Book For
Intermediate Accounting
ISBN: 978-0077400163
6th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
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