Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Assume that IBM leased equipment that was carried at a cost of $110,000 to Sunland Company. The term of the lease is 5 years beginning

image text in transcribed
image text in transcribed
Assume that IBM leased equipment that was carried at a cost of $110,000 to Sunland Company. The term of the lease is 5 years beginning December 31,2024 , with equal rental payments of $30,200 beginning December 31,2024 . The fair value of the equipment at commencement of the lease is $130,226. The equipment has a useful life of 5 years with no salvage value. The lease has an implicit interest rate of 8%, no bargain purchase option, and no transfer of title. Collectibility of lease payments for IBM is probable. Prepare IBM's December 31. 2024, journal entries at commencement of the lease. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manuolly. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. For calculation purposes, use 5 decimal places as displayed in the foctor table provided and round finol answers to 0 decimal places e.s. 5,275. Click here to view factor tables. Date Account Titles and Explanation Credit December 31, 2024 (To record the lease) December 31 , 2024 (To record receipt of lease payment) Assume that IBM leased equipment that was carried at a cost of $110,000 to Sunland Company. The term of the lease is 5 years beginning December 31,2024 , with equal rental payments of $30,200 beginning December 31,2024 . The fair value of the equipment at commencement of the lease is $130,226. The equipment has a useful life of 5 years with no salvage value. The lease has an implicit interest rate of 8%, no bargain purchase option, and no transfer of title. Collectibility of lease payments for IBM is probable. Prepare IBM's December 31. 2024, journal entries at commencement of the lease. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manuolly. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. For calculation purposes, use 5 decimal places as displayed in the foctor table provided and round finol answers to 0 decimal places e.s. 5,275. Click here to view factor tables. Date Account Titles and Explanation Credit December 31, 2024 (To record the lease) December 31 , 2024 (To record receipt of lease payment)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Accounting A Decision Emphasis

Authors: Germain B. Boer, William L. Ferrara, Debra C. Jeter

4th Edition

0873939123, 978-0873939126

More Books

Students also viewed these Accounting questions

Question

=+3. Which factors do influence the procurement management?

Answered: 1 week ago

Question

=+1. Describe the product range in the press sector!

Answered: 1 week ago