Cullumber Corp. agreed to lease property from Crane Corp. effective January 1, 2020, for an annual...
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Cullumber Corp. agreed to lease property from Crane Corp. effective January 1, 2020, for an annual payment of $24,201, beginning January 1, 2020. The property is made up of land with a fair value of $116,000 and a two-storey office building with a fair value of $174,000 and a useful life of 25 years with no residual value. The implicit interest rate is 7.5%, the lease term is 25 years, and title to the property will not be transferred to Cullumber by the end of the lease term. Assume that there is also no bargain purchase option, but that the lease does meet other criteria to qualify as a capital lease. Both Cullumber and Crane use ASPE Prepare the required entries made by Cullumber Corp. on January 1, 2020, and at its year end of December 31, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts. Round answers to 0 decimal places, e.g. 5.275.) Date Account Titles and Explanation Debit Credit Buildings under Lease (To record inception of lease.) (To record first lease payment) (To record interest.) (To record depreciation expense) Jan. 1 Jan. 1 Dec 31 Dec 31 0000000 Cullumber Corp. agreed to lease property from Crane Corp. effective January 1, 2020, for an annual payment of $24,201, beginning January 1, 2020. The property is made up of land with a fair value of $116,000 and a two-storey office building with a fair value of $174,000 and a useful life of 25 years with no residual value. The implicit interest rate is 7.5%, the lease term is 25 years, and title to the property will not be transferred to Cullumber by the end of the lease term. Assume that there is also no bargain purchase option, but that the lease does meet other criteria to qualify as a capital lease. Both Cullumber and Crane use ASPE Prepare the required entries made by Cullumber Corp. on January 1, 2020, and at its year end of December 31, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts. Round answers to 0 decimal places, e.g. 5.275.) Date Account Titles and Explanation Debit Credit Buildings under Lease (To record inception of lease.) (To record first lease payment) (To record interest.) (To record depreciation expense) Jan. 1 Jan. 1 Dec 31 Dec 31 0000000
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Date Account Titles Explanation Debit Credit Jan1 Land under lease 116000 Buildin... View the full answer
Related Book For
Intermediate Accounting Volume 2
ISBN: 9781119497042
12th Canadian Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy
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