On January 1, 2022, Durant Corporation agrees to lease equipment to Irving Corporation. The term of the
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Question:
Durant expects the asset to have a residual value of $55,000 at the end of the lease. The residual value is not guaranteed. Durant's implicit rate (known to Irving) is 10%. Irving's incremental borrowing rate is 5%.
Collectibility of the lease payments is probable.
Required
a. Calculate the amount of the annual rental payment required.
b. What type of lease is this to Irving? To Durant? Explain and show calculations.
c. Compute the value of the lease liability and prepare all of Irving's required journal entries for 2022.
d. Prepare all of Durant's required journal entries for 2022.
Related Book For
Intermediate Accounting IFRS
ISBN: 9781119607519
4th Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
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