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On January 1, 2018, Hester Co. sells machinery to Beck Corp. at its fair value of $720,000 and leases it back. The machinery had a

On January 1, 2018, Hester Co. sells machinery to Beck Corp. at its fair value of $720,000 and leases it back. The machinery had a carrying value of $631,800, the lease is for 10 years and the implicit rate is 10%. The lease payments of $106,200 start on January 1, 2018. Hester uses straight-line depreciation and there is no residual value. 


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Prepare all of Hester’s entries for 2018.


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