Question
On July 1, 2019, Jupiter Company leased equipment to Planet Company. The terms of the lease are as follows: Fair value of leased asset 70,000
On July 1, 2019, Jupiter Company leased equipment to Planet Company. The terms of the lease are as follows:
Fair value of leased asset
70,000
Lease payments, due each Jul 1
12,000
Lease term
9 years
Economic life of leased asset
10 years
Guaranteed residual value
6,000
Expected payout under the guaranteed residual
6,000
Implicit rate in the lease (not readily determinable by lessee)
13%
Lessee's incremental borrowing rate
15%
Planet uses straight-line depreciation for its property, plant, and equipment, and its year -end is December 31.
Required:
What would the journal entries for the lessee from July 1 through December 31, 2019 be?
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