1. On January 1, 2012, Adam Corp signed a 5-year non-cancellable lease for one (non-specialized) machine. The terms of this contract require annual payments of $9,968 at the beginning of each year beginning January 1, 2012.

There is no other direct initial cost. The present value of the lease payments is $41,565.22 and as of December 31, 2012 the interest expense is $3,159.72.

The rent payment is always $9,968

The machine has an estimated life of 6 years and a residual unguaranteed value of $5,000.

Adam's credit rate is 10%. And the landlord's implicit rate is not known.

Additionally, there is the following information:

It is requested:

1. Accounting record as of January 1, 2012
2. Accounting record as of December 31, 2012
3. Accounting record as of January 1, 2013 for the payment of rent

Answer rating: 100% (QA)

Adam Corp Machine Lease Accounting Records January 1 2012 Lease asset machine 4156522 Le... View the full answer