Klose Co. leases equipment to Darrento Corp. as of 1 Jan 2022. It is a ten-year period
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Question:
Klose Co. leases equipment to Darrento Corp. as of 1 Jan 2022. It is a ten-year period lease, with contract amount of $5,000,000. The incremental borrowing rate is 10%, and the company uses straight line method to depreciate the assets. The amount of semi-annual rental payments is $500,000 at the beginning period of the lease payments. There is Guaranteed Residual Value of $200,000 at the end of leased assets term.
Required:
a) What kind of lease to Darrento Corp.?
b) Calculate the PV of MLPs (minimum lease payments)!
c) Make a lease amortisation table and journalise for 2022-2023 lessee only!
Related Book For
Intermediate Accounting
ISBN: 978-0324312140
16th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen
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