Lai Corporation, which uses ASPE, leased equipment it had specifically purchased at a cost of $175,000 for

Question:

Lai Corporation, which uses ASPE, leased equipment it had specifically purchased at a cost of $175,000 for Swander, the lessee. The term of the lease is six years, beginning January 1, 2023, with equal rental payments of $33,574 at the beginning of each year. Swander pays all executory costs directly to third parties. The equipment’s fair value at the lease’s inception is $175,000. The equipment has a useful life of seven years with no residual value. The lease has an implicit interest rate of 6%, no bargain purchase option, and no transfer of title. Collectibility is reasonably assured, with no additional costs to be incurred by Lai. Using (1) tables, (2) a financial calculator, or (3) Excel functions, calculate the PV of the lease payments and prepare Lai’s January 1, 2023 journal entries at the inception of the lease. Round amounts to the nearest dollar.

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

Step by Step Answer:

Related Book For  book-img-for-question

Intermediate Accounting Volume 2

ISBN: 9781119740445

13th Canadian Edition

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

Question Posted: