YouGotThis LLC enters into a lease agreement on July 1, 2025, for equipment. YouGotThis LLC is...

  

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YouGotThis LLC enters into a lease agreement on July 1, 2025, for equipment. YouGotThis LLC is the lessee. The following data are relevant to the lease agreement: 1. 2. 3. 4. The term of the noncancelable lease is 4 years, with no renewal option. Payments of $1,716,086 are due on July 1 of each year. The fair value of the equipment on July 1, 2025 is $6,060,000. The equipment has an economic life of 6 years with no salvage value. YouGotThis LLC depreciates similar machinery it owns on the sum-of-the-years'-digits basis. The lessee pays all executory costs. 5. YouGotThis LLC's incremental borrowing rate is 11% per year. The lessee is aware that the lessor used an implicit rate of 9% in computing the lease payments. Required: 1. Indicate the type of lease YouGotThis LLC has entered into and what accounting | treatment is applicable. 2. Prepare the journal entries on YouGotThis LLC's books that relate to the lease agreement for the following dates: July 1, 2021, December 31, 2025, July 1 2026 and December 31, 2026. Please show all of your work in the calculations of each amount and a full lease amortization schedule. YouGotThis LLC enters into a lease agreement on July 1, 2025, for equipment. YouGotThis LLC is the lessee. The following data are relevant to the lease agreement: 1. 2. 3. 4. The term of the noncancelable lease is 4 years, with no renewal option. Payments of $1,716,086 are due on July 1 of each year. The fair value of the equipment on July 1, 2025 is $6,060,000. The equipment has an economic life of 6 years with no salvage value. YouGotThis LLC depreciates similar machinery it owns on the sum-of-the-years'-digits basis. The lessee pays all executory costs. 5. YouGotThis LLC's incremental borrowing rate is 11% per year. The lessee is aware that the lessor used an implicit rate of 9% in computing the lease payments. Required: 1. Indicate the type of lease YouGotThis LLC has entered into and what accounting | treatment is applicable. 2. Prepare the journal entries on YouGotThis LLC's books that relate to the lease agreement for the following dates: July 1, 2021, December 31, 2025, July 1 2026 and December 31, 2026. Please show all of your work in the calculations of each amount and a full lease amortization schedule.

Answer rating: 100% (QA)

1 Based on the given information YouGotThis LLC has entered into a finance lease A finance lease is ... View the full answer