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 $127,024.
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 $127,024. (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 | $17,000 at the beginning of each period |
| Economic life of asset | 2 years |
| Fair value of asset | $127,024 |
| 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 is recorded at the end of each fiscal year (December 31) on a straight-line basis.
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