Question
Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2021. Edison purchased the equipment from International Machines at a cost of $112,080.
Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2021. Edison purchased the equipment from International Machines at a cost of $112,080. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
| Related Information: | |
| Lease term | 2 years (8 quarterly periods) |
| Quarterly rental payments | $15,000 at the beginning of each period |
| Economic life of asset | 2 years |
| Fair value of asset | $112,080 |
| Implicit interest rate | 8% |
| (Also lessees incremental borrowing rate) | |
Required: Prepare a lease amortization schedule and appropriate entries for Manufacturers Southern from the beginning of the lease through January 1, 2022. Amortization of the right-of-use asset is recorded at the end of each fiscal year (December 31) on a straight-line basis.
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Accounting Principles Part 3
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Kinnear, Joan E. Barlow
6th Canadian edition Volume 1
978-1118306802
