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On January 1 , 2 0 1 7 Baggins Co . leases gardening equipment to Gamgee Inc. The details are as follows: The lease has
On January Baggins Co leases gardening equipment to Gamgee Inc. The details are as follows:
The lease has a noncancelable term of years.
Ownership is not transferred, there is no purchase option, and the asset is not specialized in nature. Collectability of payments is probable.
The equipment has a fair value of $ a book value of $ a useful life of years, and a salvage value of $
At the end of the lease term, Baggins expects the equipment to be worth $ None of the equipments residual value has been guaranteed by Gamgee.
Based on assessed risk Baggins has priced an rate of return into the lease. Gamgees incremental borrowing rate is
Equal payments are due at the beginning of each year. Both firms have December st fiscal year ends.
Prepare the and journal entries for Baggins.
Make the final entries Baggins will make for the lease the December entries Assume that the equipments value at the conclusion of the lease is $ Also make the entries Baggins would make if the equipments value at the end of the lease is $
Assuming the equipment came back worth $ at the end of the lease, what is the total profit Baggins records over the entire life of the lease?
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