Debbink Co. leased machinery from Young, Inc. on January 1, 2025. The lease term was for 8

Question:

Debbink Co. leased machinery from Young, Inc. on January 1, 2025. The lease term was for 8 years, with equal annual rental payments of $5,300 at the beginning of each year. In addition, the lease provides an option to purchase the machinery at the end of the lease term for $2,000, which Debbink is reasonably certain it will exercise as it believes the fair value of the machinery will be at least $6,000. The machinery has a useful life of 10 years and a fair value of $36,000. The implicit rate of the lease is not known to Debbink. Debbink’s incremental borrowing rate is 8%. Prepare Debbink’s 2025 journal entries.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Intermediate Accounting

ISBN: 9781119790976

18th Edition

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

Question Posted: