On January 1, the lessor company purchased a piece of equipment for $24,000 The equipment has an expected life of four years with zero salvage value The lessor company immediately leased the equipment under an operating lease agreement The lease calls for the lessor company to receive lease payment...

1 Purchase of equipment Leased Equipment 24000 Cash 24000 2 Lease signing and receipt of first lea ...

On January 1, the lessor company purchased a piece of equipment for $24,000. The equipment has an

Question:

On January 1, the lessor company purchased a piece of equipment for $24,000. The equipment has an expected life of four years with zero . The lessor company immediately leased the equipment under an operating lease agreement. The lease calls for the lessor company to receive lease payments of $6,800 per year to be received at the beginning of the year. Make the journal entries necessary on the books of the lessor company to record
(1) The purchase of the equipment for cash,
(2) The lease signing (including receipt of the first lease payment), and
(3) Depreciation of the leased equipment.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...