Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Python Company leased equipment from Hope Leasing on January 1, 2020. Hope recently purchased the equipment at a cost of $222,664. Other information: Lease term
Python Company leased equipment from Hope Leasing on January 1, 2020. Hope recently purchased the equipment at a cost of $222,664.
Other information:
Lease term 3 years
Annual payments $80,000 on January 1 each year
Life of asset 3 years
Fair value of asset $222,664
Implicit interest rate 8%
Incremental rate 8%
There is no expected residual value.
Required:
- Show how Hope determined the $80,000 annual lease payments.
- Prepare appropriate journal entries for Hope for 2020 and 2021. Round your answers to the nearest whole dollar amounts. Prepare an amortization schedule for Hope
- Prepare appropriate journal entries for Python for 2020 and 2021. Assume straight-line depreciation and a December 31 year-end. Round your answers to the nearest whole dollar amounts.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started