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I would like you to please double check if I had done thisproblem correctly. Thank you. Please show work, partial credit can only be given
I would like you to please double check if I had done thisproblem correctly. Thank you.
Please show work, partial credit can only be given to those that show their work. J Problem 1: Tony Tiger, as lessee, enters into a lease agreement on May 1, 2017, for a tiger costume with Costume Inc. The following data are relevant to the lease agreement: The term of the noncancelable lease is 10 years, with no renewal option. Payments of $138,990 are due at the beginning of each year, starting today. The fair value of the costume is $1,000,000 (it's a pretty unique costume). The costume has an economic life of 13 years with no salvage value. Tony Tiger depreciates similar costumes on a straight-line basis. $1,000 Executory costs are paid by the lessee on an annual basis, of which are included in the above rent payment to the lessor. Tony Tiger's incremental borrowing rate is 8% per year and the implicit rate is unknown. Required: (a) Indicate the type of lease Tony Tiger (lessee) has entered into I believe this is CAPITAL LEASE (b) Prepare a partial amortization schedule for the lessee that goes up to 5/1/19. Date 5/1/2017 5/1/2017 5/1/2018 5/1/2019 Lease Payment Executory Costs Interest (8%) on Liability Reduction of Lease Liability Lease Liability (c) Prepare the journal entries on Tony Tiger's books that relate to the lease agreement for the following dates: 5/1/17 (2 JE's), 12/31/17 (2 JE's), and 5/1/18 (1 JE) May 1, 17 May 1, 17 Dec 31, 17 Dec 31, 17 May 1, 18 (d) Prepare the journal entries on Costume Inc's books that relate to the lease agreement for the following date: 5/1/17 (2 JE's) May 1, 17 May 1, 17 agreementStep by Step Solution
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