Assume IBM leased equipment that was carried at a cost of $150,000 to Blossom Company. The term of the lease is 5 years beginning December 31, 2024, with equal rental payments of $30, 100 beginning December 31, 2024. The fair value of the equipment at commencement of the lease is $129, 795. The equipment has a useful life of 5 years with no salvage value. The lease has an implicit interest rate of 8%, no bargin purchase option, and no transfer of title. Collectibility of lease payments for IBM is probable. Prepare IBM's December 31, 2024, journal entries at commencement of the lease.
Assume IBM leased equipment that was carried at a cost of $150,000 to Blossom Company. The term of the lease is 5 years beginning December 31, 2024, with equal rental payments of $30, 100 beginning December 31, 2024. The fair value of the equipment at commencement of the lease is $129, 795. The equipment has a useful life of 5 years with no salvage value. The lease has an implicit interest rate of 8%, no bargin purchase option, and no transfer of title. Collectibility of lease payments for IBM is probable. Prepare IBM's December 31, 2024, journal entries at commencement of the lease.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Assume IBM leased equipment that was carried at a cost of $150,000 to Blossom Company. The term of the lease is 5 years beginning December 31, 2024, with equal rental payments of $30, 100 beginning December 31, 2024. The fair value of the equipment at commencement of the lease is $129, 795. The equipment has a useful life of 5 years with no salvage value. The lease has an implicit interest rate of 8%, no bargin purchase option, and no transfer of title. Collectibility of lease payments for IBM is probable. Prepare IBM's December 31, 2024,
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