Dynamite Inc. entered into a lease that requires them to make 4 equal payments of $148,000 at
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Question:
Dynamite Inc. entered into a lease that requires them to make 4 equal payments of $148,000 at the beginning of each year for rental space.
- Dynamite thinks the equipment will have a residual value of $86,400 at the end of the lease. Dynamite can either pay $86,400 to retain the equipment or allow the company they leased it from (TNT Corp.) remove it at the end of the lease.
- TNT has an implicit rate in this lease of 6%.
- Dynamite Inc. has an incremental borrowing rate of 7% and depreciates the asset on a straight line basis over 4 years.
- The lease starts January 20X1
Required:
Prepare lease liability amortization table for the lease
Prepare journal entries for this lease for 2011 and 2012
Related Book For
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts
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