On January 1, 2020, Animation Ltd., which uses ASPE, sold a truck to Letourneau Finance Corp. for

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On January 1, 2020, Animation Ltd., which uses ASPE, sold a truck to Letourneau Finance Corp. for $65,000 and immediately leased it back. The truck was carried on Animation’s books at $53,000, net of $26,000 of accumulated depreciation. The term of the lease is five years, and title transfers to Animation at lease end. The lease requires five equal rental payments of $17,147, with each payment made at year end. The appropriate rate of interest is 10%, and the truck has a useful life of five years with no salvage value. Prepare Animation’s 2020 journal entries including any year-end adjusting entries at December 31, 2020.

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Intermediate Accounting Volume 2

ISBN: 9781119497042

12th Canadian Edition

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy

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