Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Question #2 On January 1, 2019, ET Mags Inc. signed a 6-year non-cancelable lease for an alloy wheel molding injection press. The terms of
Question #2 On January 1, 2019, ET Mags Inc. signed a 6-year non-cancelable lease for an alloy wheel molding injection press. The terms of the lease called for ET Mags to make annual payments of $34,533.30 at the beginning of each year, starting January 1, 2019. The alloy wheel molding injection press has an estimated useful life of 6 years and a $10,000 unguaranteed residual value. The press reverts back to the lessor at the end of the lease term. ET Mags uses the straight-line method of depreciation for all of its plant assets and has an incremental borrowing rate of 6%; the lessor's implicit rate is unknown. Required: (a) Compute the present value of the minimum lease payments; round to nearest whole dollar. (b) Prepare all necessary journal entries for ET Mags covering this lease through December 31, 2020; round your entries to nearest whole dollar.
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