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10. On January 1 , 2021 , Santee Company leased equipment , with a fair value of $ 25,771 ( cost $ 20,000 ) ,
10. On January 1 , 2021 , Santee Company leased equipment , with a fair value of $ 25,771 ( cost $ 20,000 ) , to Bellimoso Company under a 3-year leade. The economic life of the asset is 4 years . The present value of the lease payments equals $ 25,771 and $ 10,000 in annual lease payments are due at the end of each year of the lease. An implied rate of 8 % is assumed . What entry does the lessee make every year to write off the leased asset ? A, B, C, or D
\begin{tabular}{l|l|r|r|} \hline & & Debit & Credit \\ \hline & Amortization expense & 8,590 & \\ \hline & Right of use asset & & 8,590 \\ \hline \hline & & Debit & Credit \\ \hline & Lease liability & 8,590 & \\ \hline & Right of use asset & & 8,590 \\ \hline \hline & & Debit & Credit \\ \hline & Amortization expense & 6,442 & \\ \hline & Right of use asset & & 6,442 \\ \hline \hline & & Debit & Credit \\ \hline & Lease liability & 6,442 & \\ \hline & Right of use asset & & 6,442 \\ \hline \end{tabular} Step by Step Solution
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