Berne Company (lessor) enters into a lease with Fox Company to lease equipment to Fox beginning January 1, 2019. The lease terms, provisions, and related events are asfollows:1. The lease term is 4 years. The lease is noncancelable and requires annual rental payments of $50,000 to be made at the end of each year.The equipment costs $130,000. The equipment has an estimated life of 4 years and an estimated residual value at the end of the lease term of zero.Fox agrees to pay all executory costs directly to a third party.4. The interest rate implicit in the lease is 12%.5. The initial direct costs are insignificant and assumed to be zero.6. The collectability of the rentals is reasonably assured.Required:2.3.1. Next Level Assuming that the lease is a sales-type lease from Berne's point of view, calculate the selling price and assume that this is also the fair value.2. Prepare a table summarizing the lease receipts and interest income earned by Berne.3. Prepare journal entries for Berne, the lessor, for the years 2019 and 2020.

- Selling Price (Fair Value) for Sales-Type Lease: $291,165- Lease Receipts and Interest Income…

Answered: Berne Company (lessor) enters into a…

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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