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Bankers Group Inc., a financial consulting firm, signs a five-year lease for a computer system that requires annual payments of $10,000 at the end of
Bankers Group Inc., a financial consulting firm, signs a five-year lease for a computer system that requires annual payments of $10,000 at the end of each year, starting in 2010. The effective interest rate on the lease is 8%.
Required: 1. If Bankers Group records the contract as an operating lease, journalize the accounting entries for the different years,
2. if Bankers Group chose to capitalize the lease, journalize the accounting entries for the different years.
3. Contrast the two methods.
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