Company A (sse) has reached a lease agreement with Company (essor) to lease a noe boom lill beginning January 1, Year 1 The lease agreement contains the following information • The lease is for three years requiring annual payments at the beginning of the year of $10,213 (annuity-due basis). The boom lift has a fair value at the beginning of the lease of $40,000; an estimated economic life of five years; and en unquaranteed residual value of $12,500. • Present value of the residual value is $10,798 • There are no renewal options. At the end of the lease the boom lift will be returned to Company B • The lease does not pass any of the finance lease tests. What is the journal entry that Company A should make on January 1, Year 1 to record the lease? Debit Leased Asset for $40,000; Credit Lease Liability for $40,000 Debit Leased Asset for $29,787; Credit Lease Liability for $29,787 Debit Leased Asset for $27,500; Credit Lease Liability for $27,500 Debit Leased Asset for $29,202; Credit Lease Liability for $29,202
Company A (sse) has reached a lease agreement with Company (essor) to lease a noe boom lill beginning January 1, Year 1 The lease agreement contains the following information • The lease is for three years requiring annual payments at the beginning of the year of $10,213 (annuity-due basis). The boom lift has a fair value at the beginning of the lease of $40,000; an estimated economic life of five years; and en unquaranteed residual value of $12,500. • Present value of the residual value is $10,798 • There are no renewal options. At the end of the lease the boom lift will be returned to Company B • The lease does not pass any of the finance lease tests. What is the journal entry that Company A should make on January 1, Year 1 to record the lease? Debit Leased Asset for $40,000; Credit Lease Liability for $40,000 Debit Leased Asset for $29,787; Credit Lease Liability for $29,787 Debit Leased Asset for $27,500; Credit Lease Liability for $27,500 Debit Leased Asset for $29,202; Credit Lease Liability for $29,202
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 9RE: Use the information in RE20-3. Prepare the journal entries that Richie Company (the lessor) would...
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