Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Concord Company. The following information relates to this agreement. 1. The

Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Concord Company. The following information relates to this agreement. 1. The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. 2. The fair value of the asset at January 1, 2020, is $79,000. 3. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $9,000, none of which is guaranteed. 4. The agreement requires equal annual rental payments of $24,288.56 to the lessor, beginning on January 1, 2020. 5. The lessee's incremental borrowing rate is 4%. The lessor's implicit rate is 3% and is unknown to the lessee. 6. Concord uses the straight-line depreciation method for all equipment. Click here to view factor tables. Prepare all of the journal entries for the lessee for 2020 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee's annual accounting period ends on December 31. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round answers to 2 decimal places, e.g. 5,265.25. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation 1/1/20 Right-of-Use Asset 1/1/20 12/31/20 Debit 60764.82 Lease Liability (To record the lease) Lease Liability 21250.9 Cash (To record lease liability) Lease Expense Lease Liability Right-of-Use Asset 21250.9 Credit 60764.82 21250.9 1975.7 19275.2

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

Becoming An Unstoppable Woman In Finance 29 Strategic Financial Experts

Authors: Hanna Olivas, Adriana Luna Carlos, Heather Stokes, Lisa Chastain, Jennifer Lara, Shannon Lavenia, Althia Lopez, Heather Jackson, Annette Morris, Rebecca Chandler

1st Edition

979-8986936703

More Books

Students also viewed these Accounting questions

Question

Have you ever been arrested for a crime?

Answered: 1 week ago

Question

4. Identify the challenges facing todays organizations

Answered: 1 week ago