"Blossom Corporation entered into a lease agreement on January 1, 2025, to provide Cullumber Company with a piece of machinery. The terms of the lease agreement were as follows. 1. The lease is to be for 3 years with rental payments of $15,322 to be made at the beginning of each year. 2. The machinery has a fair value of $62,000, a book value of $40,000, and an economic life of 8 years. 3. At the end of the lease term, both parties expect the machinery to have a residual value of $20,000, none of which is guaranteed. 4. The lease does not transfer ownership at the end of the lease term, does not have a bargain purchase option, and the asset is not of a specialized nature. 5. The implicit rate is 4 %, which is known by Cullumber. 6. Collectibility of the payments is probable." Prepare the 2025 journal entries for Cullumber Prepare the 2025 Journal entries for Blossom Suppose the lease were only for one year instead of 3 years, with just one lease payment at the beginning of the lease term. Prepare any journal entries Cullumber would need, assuming it elects to use the short-term lease option. ?

"Blossom Corporation entered into a lease agreement on January 1, 2025, to provide Cullumber Company with a piece of machinery. The terms of the lease agreement were as follows. 1. The lease is to be for 3 years with rental payments of $15,322 to be made at the beginning of each year. 2. The machinery has a fair value of $62,000, a book value of $40,000, and an economic life of 8 years. 3. At the end of the lease term, both parties expect the machinery to have a residual value of $20,000, none of which is guaranteed. 4. The lease does not transfer ownership at the end of the lease term, does not have a bargain purchase option, and the asset is not of a specialized nature. 5. The implicit rate is 4 %, which is known by Cullumber. 6. Collectibility of the payments is probable." Prepare the 2025 journal entries for Cullumber Prepare the 2025 Journal entries for Blossom Suppose the lease were only for one year instead of 3 years, with just one lease payment at the beginning of the lease term. Prepare any journal entries Cullumber would need, assuming it elects to use the short-term lease option. ?

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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