Question
Martinez Corporation enters into a 7-year lease of equipment on December 31, 2019, which requires 7 annual payments of $38,200 each, beginning December 31, 2019.
Martinez Corporation enters into a 7-year lease of equipment on December 31, 2019, which requires 7 annual payments of $38,200 each, beginning December 31, 2019. In addition, Martinez guarantees the lessor a residual value of $18,500 at the end of the lease. However, Martinez believes it is probable that the expected residual value at the end of the lease term will be $9,250. The equipment has a useful life of 7 years.
Prepare Martinezs' December 31, 2019, journal entries assuming the implicit rate of the lease is 11% and this is known to Martinez.
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Intermediate Accounting IFRS
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
3rd edition
1119372933, 978-1119372936
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