Assume that the lease contract involved an identified leased equipment at a cost of $120,000 by the lessor. The term of the lease is 6 years beginning December 31, 2021, with equal rental payments of $30,044 beginning December 31, 2021. The fair value of the equipment at commencement of the lease is $150,001. The equipment has a useful life of 6 years with no salvage value. The lease has an implicit interest rate of 8%, no bargain purchase option, and no transfer of title. Collectibility of lease payments is probable. Prepare the lessor's journal entries on December 31, 2021, at commencement of the lease. Show all your work for partial credits.
Assume that the lease contract involved an identified leased equipment at a cost of $120,000 by the lessor. The term of the lease is 6 years beginning December 31, 2021, with equal rental payments of $30,044 beginning December 31, 2021. The fair value of the equipment at commencement of the lease is $150,001. The equipment has a useful life of 6 years with no salvage value. The lease has an implicit interest rate of 8%, no bargain purchase option, and no transfer of title. Collectibility of lease payments is probable. Prepare the lessor's journal entries on December 31, 2021, at commencement of the lease. Show all your work for partial credits.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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