Question
On January 1, 2020, AAA leased equipment from BBB under a four-year lease requiring equal annual payments of $344,152, with the first payment due at
On January 1, 2020, AAA leased equipment from BBB under a four-year lease requiring equal
annual payments of $344,152, with the first payment due at lease inception. The lease does not
transfer ownership, nor is there a bargain purchase option. The equipment has a 4-year useful life
and no salvage value. AAA's incremental borrowing rate is 10% and the rate implicit in the lease
(which is known by AAA) is 8%. Prepare the journal entries BBB has to report regarding this lease in
2020.
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Introduction to Managerial Accounting
Authors: Peter C. Brewer, Ray H Garrison, Eric Noreen
8th edition
1259917061, 978-1259917066
