1. Provide the journal entries required on the lessee's books through January 1, 2020. 1/1/2020 journal entries for acquiring the lease asset: Account Dr. Account Cr. 1/1/2020 journal entries for the first payment: Account Dr. Account Cr.
Lessor CBA, Inc. leased a machine to lessee DF Co. The lease is noncancelable and requires DF to pay $6,000 per year, payable in advance, over a four-year period. CBA’s implicit interest rate (known to DF) is 6 percent. The lease term begins on January 1, 2020. The machine’s economic life is 7 years. The machine's book value is $26,000 and fair value $30,000, with a guaranteed residual value of $10,000. The collectability of the lease payments is probable for the lessor.
(Note: Present value of an ordinary annuity of 1 for 4 periods at 6% is 3.46511, of an annuity due of 1 for 4 periods at 6% is 3.67301. Present value of 1 for 4 periods at 6% is 0.79209).
Notes: Read carefully and follow strictly so that Bb can grade you correctly!
1. Use comma in numbers, one thousand is 1,000, not 1000. No $ sign. No positive or negative sign.
2. If no entry is required, write N/A.
3. Only use the following accounts: ROU asset, Lease liability,
4. Copy account names accurately to receive credits, names are not case sensitive.
1. Provide the
1/1/2020 journal entries for acquiring the lease asset:
Account Dr.
Account Cr.
1/1/2020 journal entries for the first payment:
Account Dr.
Account Cr.
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