Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Swifty Corporation leases equipment from Falls Company on January 1, 2025. The lease agreement does not transfer ownership, contain a bargain purchase option, and is

image text in transcribedimage text in transcribed

Swifty Corporation leases equipment from Falls Company on January 1, 2025. The lease agreement does not transfer ownership, contain a bargain purchase option, and is not a specialized asset. It covers 3 years of the equipment's 8-year useful life, and the present value of the lease payments is less than 90% of the fair value of the asset leased. Prepare Swifty's journal entries on January 1, 2025, and December 31, 2025. Assume the annual lease payment is $44,000 at the beginning of each year, and Swifty's incremental borrowing rate is 4%, which is the same as the lessor's implicit rate. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, e.g. 5,265. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.) Click here to view factor tables. Question 11 of 20 0.46/0.6 1/1/25 Right-of-Use Asset Lease Liability (To record lease liability) 1/1/25 Lease Liability 44000 Cash (To record lease payment) 12/31/25 Lease Expense 44000 Lease Liability Right-of-Use Asset

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Practitioners Blueprint To Construction Auditing

Authors: Ron Risner

1st Edition

0894137263, 978-0894137266

More Books

Students also viewed these Accounting questions

Question

What are the four key questions in evaluating a credit application?

Answered: 1 week ago