Harbaugh Company leased equipment from Wolverine Leasing on January 1, 2021. Wolverine purchased the equipment at...

 

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Harbaugh Company leased equipment from Wolverine Leasing on January 1, 2021. Wolverine purchased the equipment at a cost of $144,000. The equipment has a Fair Value of $180,000 and an economic life of 5 years, and there is no expected residual value. Other information: Lease term Annual payments Life of asset Implicit interest rate (known) PV of Ordinary Annuity (9%, 5) PV of Annuity Due (9%, 5) Answer the following: I 5 years $42,456 on January 1 each year 5 years 9% 3.88965 4.23972 (a) How would Harbaugh Company classify the lease? How do you know? (b) How would Wolverine Leasing classify this arrangement? (c) Prepare the journal entries for Harbaugh Company on January 1, 2021. (e) Prepare the journal entries for Harbaugh Company on December 31, 2021 (f) Prepare the journal entry for Wolverine Leasing on December 31, 2021 (8) Prepare the journal entry for Harbaugh Company on January 1, 2022. Harbaugh Company leased equipment from Wolverine Leasing on January 1, 2021. Wolverine purchased the equipment at a cost of $144,000. The equipment has a Fair Value of $180,000 and an economic life of 5 years, and there is no expected residual value. Other information: Lease term Annual payments Life of asset Implicit interest rate (known) PV of Ordinary Annuity (9%, 5) PV of Annuity Due (9%, 5) Answer the following: I 5 years $42,456 on January 1 each year 5 years 9% 3.88965 4.23972 (a) How would Harbaugh Company classify the lease? How do you know? (b) How would Wolverine Leasing classify this arrangement? (c) Prepare the journal entries for Harbaugh Company on January 1, 2021. (e) Prepare the journal entries for Harbaugh Company on December 31, 2021 (f) Prepare the journal entry for Wolverine Leasing on December 31, 2021 (8) Prepare the journal entry for Harbaugh Company on January 1, 2022.

Answer rating: 100% (QA)

a How would Harbaugh Company classify the lease How do you know The lease would be classified as a f... View the full answer