Use the information for Merrill Corporation from BE20.11. Assume that a residual value of $17,000 is expected
Question:
Use the information for Merrill Corporation from BE20.11. Assume that a residual value of $17,000 is expected at the end of the lease, but that Merrill does not guarantee the residual value. Using
(1) Tables,
(2) A financial calculator,
(3) Excel functions, calculate the amount of the capital lease. Prepare Merrill’s September 1, 2020 journal entry, assuming an interest rate of 9% and that Merrill also uses ASPE. Round amounts to the nearest dollar.
Data From BE20.11.
Merrill Corporation, which uses ASPE, enters into a six-year lease of equipment on September 1, 2020, that requires six annual payments of $28,000 each, beginning September 1, 2020. In addition, Merrill guarantees the lessor a residual value of $17,000 at lease end. The equipment has a useful life of seven years.
Step by Step Answer:
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