Question
Edison Company leased equipment from Hi-Tech Leasing on January 1, 2022. Other information: Lease term 3 years Annual payments $40,000 on January 1 each year
Edison Company leased equipment from Hi-Tech Leasing on January 1, 2022.
Other information:
Lease term 3 years
Annual payments $40,000 on January 1 each year
Life of asset 3 years
Implicit interest rate 8%
There is no expected residual value.
Required:
1. Using the Excel (not formula or PV tables), compute the amount of Right-of-Use Asset as the present value of future lease payments. Explain how you compute this PV.
2. Prepare appropriate journal entries for Edison for 2022. Assume straight-line amortization and a December 31 year-end. Round your answers to the nearest whole dollar amounts.
January 1, 2022:
December 31, 2022:
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Essentials of Accounting for Governmental and Not-for-Profit Organizations
Authors: Paul A. Copley
10th Edition
007352705X, 978-0073527055
