Current Attempt in Progress

On January $1,2022,$ Carla Vista Inc., a construction company, leased an excavator from Sandhill Inc. The lease terms are as follows:

Annual lease payments of $$28,300$ at the beginning of each year for five years

At the end of the lease term the asset reverts back to the lessor and the residual value guarantee is $$11,400$

The incremental borrowing rate is $8\%$ and the implicit rate in the lease is $7\%($known by the lessee$)$

Carla Vista Inc. has a December $31$ year end

Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE.

Date

Account Titles and Explanation

Debit

Credit

$($To record depreciation$)$

$($To record interest$)$

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