ACC 201 Chapter 15 Open-Ended Assignment Note: Please put your answers only in the section below the Bold Red sentence at the end of the Required section below. On December 31, Year One, the Dispersion Company decides to lease a piece of equipment rather than buy it. The lease is for 8 years. Payments are $49,000 every December 31 beginning on December 31, Year One. The implicit rate is 11 percent and is known by Dispersion. Required: A. Assume this lease is classified as a finance lease. What journal entries are made in Year One and Year two? B. Assume this lease is classified as an operating lease. What journal entries are made in Year One and Year two? Your answers to this open-ended assignment should be placed in the space below this line. A Assuming the lease is a finance lease: Date Account Name Debit Credit Dec. 31, Year One Dec. 31, Year One Dec. 31, Year Two Dec. 31, Year Two Dec. 31, Year Two - B Assuming the lease is an operating lease: Date Account Name Debit Credit Dec. 31, Year One Dec. 31, Year One Dec. 31, Year Two Dec. 31, Year Two

14th Edition

ISBN:9781285867977

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter20: Hybrid Financing: Preferred Stock, Leasing, Warrants, And Convertibles

Section: Chapter Questions

Problem 13IC: FISH CHIPS INC, PART I LEASE ANALYSIS Martha Millon, financial manager for Fish it Chips Inc., has...

Related questions

Question

ACC 201
Chapter 15 Open-Ended Assignment

Note: Please put your answers only in the section below the Bold Red sentence at the end of the Required section below.

On December 31, Year One, the Dispersion Company decides to lease a piece of equipment rather than buy it. The lease is for 8 years. Payments are $49,000 every December 31 beginning on December 31, Year One. The implicit rate is 11 percent and is known by Dispersion.

Required:
A. Assume this lease is classified as a finance lease. What journal entries are made in Year One and Year two?
B. Assume this lease is classified as an operating lease. What journal entries are made in Year One and Year two?


Your answers to this open-ended assignment should be placed in the space below this line.

A	Assuming the lease is a finance lease:
	Date	Account Name	Debit	Credit
	Dec. 31, Year One



	Dec. 31, Year One




	Dec. 31, Year Two



	Dec. 31, Year Two



	Dec. 31, Year Two
				-



B	Assuming the lease is an operating lease:
	Date	Account Name	Debit	Credit
	Dec. 31, Year One



	Dec. 31, Year One




	Dec. 31, Year Two




	Dec. 31, Year Two