Assume that IBM leased equipment that was carried at a cost of $97,000 to Crane Company. The term of the lease is 5 years beginnin December 31, 2024, with equal rental payments of $30,200 beginning December 31, 2024. The fair value of the equipment at commencement of the lease is $128,040. The equipment has a useful life of 5 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. Prepare IBM's December 31, 2024, journal entries at commencement of the lease. (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. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places eg. 5,275.)
Assume that IBM leased equipment that was carried at a cost of $97,000 to Crane Company. The term of the lease is 5 years beginnin December 31, 2024, with equal rental payments of $30,200 beginning December 31, 2024. The fair value of the equipment at commencement of the lease is $128,040. The equipment has a useful life of 5 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. Prepare IBM's December 31, 2024, journal entries at commencement of the lease. (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. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places eg. 5,275.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
A1
Transcribed Image Text:Date
December 31,
2024
December 31,
2024
Account Titles and Explanation
(To record the lease)
(To record receipt of lease payment)
Debit
Credit
Transcribed Image Text:Assume that IBM leased equipment that was carried at a cost of $97,000 to Crane Company. The term of the lease is 5 years beginning
December 31, 2024, with equal rental payments of $30,200 beginning December 31, 2024. The fair value of the equipment at
commencement of the lease is $128,040. The equipment has a useful life of 5 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.
Prepare IBM's December 31, 2024, journal entries at commencement of the lease. (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. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round
final answers to O decimal places e.g. 5,275.)
Click here to view factor tables.
Date
December 31,
2024
Account Titles and Explanation
Debit
Credit
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