Assume that IBM leased equipment that was carried at a cost of $115,000 to Crane Company. The term of the lease is 6 years beginning December 31, 2024, with equal rental payments of $29,654 beginning December 31, 2024. The fair value of the equipment at commencement of the lease is $144,998. The equipment has a useful life of 6 years with no salvage value. The lease has an implicit interest rate of 9%, no bargain purchase option, and no transfer of title. Collectibility of lease payments for IBM is probable. Assume the sales-type lease was recorded at a present value of $144,998. Prepare IBM's December 31, 2025, entry to record the lease transaction with Crane Company. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to O decimal places e.g. 5,275.) Account Titles and Explanation Cash Lease Receivable Debit 29,654 Credit
Assume that IBM leased equipment that was carried at a cost of $115,000 to Crane Company. The term of the lease is 6 years beginning December 31, 2024, with equal rental payments of $29,654 beginning December 31, 2024. The fair value of the equipment at commencement of the lease is $144,998. The equipment has a useful life of 6 years with no salvage value. The lease has an implicit interest rate of 9%, no bargain purchase option, and no transfer of title. Collectibility of lease payments for IBM is probable. Assume the sales-type lease was recorded at a present value of $144,998. Prepare IBM's December 31, 2025, entry to record the lease transaction with Crane Company. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to O decimal places e.g. 5,275.) Account Titles and Explanation Cash Lease Receivable Debit 29,654 Credit
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 6P: Sales-Type Lease with Unguaranteed Residual Value Lessor Company and Lessee Company enter into a...
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![Assume that IBM leased equipment that was carried at a cost of $115,000 to Crane Company. The term of the lease is 6 years
beginning December 31, 2024, with equal rental payments of $29,654 beginning December 31, 2024. The fair value of the equipment
at commencement of the lease is $144,998. The equipment has a useful life of 6 years with no salvage value. The lease has an implicit
interest rate of 9%, no bargain purchase option, and no transfer of title. Collectibility of lease payments for IBM is probable. Assume
the sales-type lease was recorded at a present value of $144,998.
Prepare IBM's December 31, 2025, entry to record the lease transaction with Crane Company. (List all debit entries before credit entries.
Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for
the account titles and enter O for the amounts. Round answers to O decimal places e.g. 5,275.)
Account Titles and Explanation
Cash
Lease Receivable
Notes Payable
Debit
29,654
Credit](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb87a4fec-84a6-47f1-ad5d-e0f297dacf37%2F752e7352-c9b2-4234-91df-3476badfffdd%2Frrx2ovu_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Assume that IBM leased equipment that was carried at a cost of $115,000 to Crane Company. The term of the lease is 6 years
beginning December 31, 2024, with equal rental payments of $29,654 beginning December 31, 2024. The fair value of the equipment
at commencement of the lease is $144,998. The equipment has a useful life of 6 years with no salvage value. The lease has an implicit
interest rate of 9%, no bargain purchase option, and no transfer of title. Collectibility of lease payments for IBM is probable. Assume
the sales-type lease was recorded at a present value of $144,998.
Prepare IBM's December 31, 2025, entry to record the lease transaction with Crane Company. (List all debit entries before credit entries.
Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for
the account titles and enter O for the amounts. Round answers to O decimal places e.g. 5,275.)
Account Titles and Explanation
Cash
Lease Receivable
Notes Payable
Debit
29,654
Credit
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