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I am not understanding this journal entry and my teacher is confusing me even more. Can anyone help me? Journal entry: May 1: A new

I am not understanding this journal entry and my teacher is confusing me even more. Can anyone help me?

Journal entry:

May 1: A new long-term lease is entered into for a much larger corporate office which will house the company and its future acquired company. The net present value of the future lease payments is $510,800. The lease is for six years.

What I did:

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However, there is to be some kind of rent expense according to the general ledger account, but there is no journal entry noted in the appendix provide. I asked my teacher about it, and she referred me to an announcement made a few weeks ago and told me to review it. I still don't understand what I am missing.

Announcement:

  1. Explore Fixed Assets (also known as Property Plant and Equipment or Plant Assets)
    1. These chapters are a little more straight forward with depreciation and sale of plant assets.
    2. There are many instances where time is important, for instance depreciation for part of the year in the year purchased and for part of the year in the year disposed of.
  2. I will be grading your Project 1 Milestone. You will be able to make corrections to these next week in Project 1.
  3. You will be completing the Project 2 Milestone this week. This will be a similar process to the Project 1 Milestone, but will be entries related to PP & E.
    1. For the May 1 je, a long-term lease is similar to purchasing an asset with a loan. Instead of DR equipment we will DR Right of Use Asset and we will credit Lease Liability. Then on June 30th you will amortize the asset by DR Rent Exp and Cr Accumulated Amortization-ROU Asset.
    2. Pay close attention to months for all of the depreciation amounts.

Here is the full appendix provided for the assignment:

Accounting Data Appendix

The following events occurred during the first half of the year. Book the entries necessary for the corresponding transactions that have occurred.

January 1: Purchased a fleet of vehicles for $350,000 via a loan from the bank. The trucks have a useful life of six years. The loan is for six years with an interest rate of 4.3%. The company already owned $200,000 of vehicles prior to this purchase with an accumulated depreciation of $80,000.

February 6: It is determined that the intangible recorded for a patent is impaired by $50,000. The patent owned for two years was estimated to be worth $120,000 and has a life of 10 years. Book the journal entry for the impairment.

March 25: Purchased 10-year maturity bonds as an investment for $45,000.

April 5: New construction equipment was purchased for the project at the golf course for $120,000. The forklifts have a useful life of seven years. The company already owned $50,000 of construction equipment prior to this purchase with an accumulated depreciation of $22,000.

May 1: A new long-term lease is entered into for a much larger corporate office which will house the company and its future acquired company. The net present value of the future lease payments is $510,800. The lease is for six years.

June 14: A forklift is disposed of that had a book value of $7,500 and accumulated depreciation of $5,200.

June 30: Book the depreciation for the first half of the year on the vehicles you purchased January 1.

June 30: Book the depreciation for the first half of the year on the construction equipment you purchased April 5.

June 30: Book the interest for the first half of the year on the fleet of vehicles you purchased January 1.

June 30: Book the amortization for the first half of the year on the right-of-use leased asset from May 1.

I don't see where a rent expense would occur??

\begin{tabular}{|l|l|l|l|} \cline { 2 - 4 } 1-May & Right of Use Lease Asset & $510,800.00 & \\ \cline { 2 - 4 } & Lease Liability & & $10,800.00 \\ \hline & new lease for 6 year term & & \\ \hline \end{tabular}

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