The Lessor Corporation leases equipment to Lessee Corporation beginning January 1, 2018. The following Info is available.
Question:
The Lessor Corporation leases equipment to Lessee Corporation beginning January 1, 2018. The following Info is available.
1. The lease term is 6 years; the lease requires equal payments of $91,843 to be made at the beginning of each year (first payment due January 1, 2018)
2.The cost of the equipment is $440,000; the equipment has an estimated life of 6 years and has a zero estimated residual value at the end of that time. Both companies use straight-line depreciation.
3. The interest rate implicit in the lease is 10%. Lessee is aware of this rate.
Required:
A. Prepare the entry required for Lessee on January 1, 2028
B. Prepare the general journal entries required for Lessee on December 31, 2018
C. Prepare the general journal entry required on January 1, 2019, for Lessee
D. Determine the interest expense for 2019 for Lessee
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella