Assume that IBM leased equipment that was carried at a cost of $142,000 to Cullumber Company. The term of the lease is 6 years beginning December 31, 2024, with equal rental payments of $35,176 beginning December 31, 2024. The fair value of the equipment at commencement of the lease is $171,998. 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 $171,998. Prepare IBM's December 31, 2025, entry to record the lease transaction with Cullumber Company. (List 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 Debit Credit

Assume that IBM leased equipment that was carried at a cost of $142,000 to Cullumber Company. The term of the lease is 6 years beginning December 31, 2024, with equal rental payments of $35,176 beginning December 31, 2024. The fair value of the equipment at commencement of the lease is $171,998. 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 $171,998. Prepare IBM's December 31, 2025, entry to record the lease transaction with Cullumber Company. (List 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 Debit Credit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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