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AlC Company, as lessee, enters into a lease agreement on January 1, 2022, for equipment. The following data are relevant to the lease agreement: 1.
AlC Company, as lessee, enters into a lease agreement on January 1, 2022, for equipment. The following data are relevant to the lease agreement: 1. The term of the noncancelable lease is 6 years, with no renewal option. Payments of $736,249 an due on January 1 of each year, beginning January 1,2022. 2. The fair value of the equipment on January 1,2022 is $3,600,000. The equipment has an conomic life of 8 years with no salvage value. 3. AIC incremental borrowing rate and the lessor's implicit rate are both 9%. 4. This lease qualifies as a finance lease for AIC. 5. Present value factors: Required: Prepare the journal entries on AIC's books that relate to the lease agreement for the following dates: a) January 1, 2022 b) December 31,2022
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