Use the information for IBM (USA) from BE21.9. Assume the sales-type lease was recorded at a present value of £150,001. Prepare IBM’s December 31, 2022, entry to record the lease transaction with Swander plc.

BE21.9

Assume that IBM (USA) leased equipment that was carried at a cost of £120,000 to Swander plc. The term of the lease is 6 years beginning December 31, 2021, with equal rental payments of £30,044 beginning December 31, 2021. The fair value of the equipment at commencement of the lease is £150,001. The equipment has a useful life of 6 years with no residual value. The lease has an implicit interest rate of 8%, no bargain purchase option, and no transfer of title. Collectibility of lease payments for IBM is probable. Prepare IBM’s December 31, 2021, journal entries at commencement of the lease.