Braun Company acquired a piece of equipment from Tipper Company under a lease agreement. Thelease requires six annual lease payments of $35.000 with the first payment due when the leasebegins, on January 1, 2020. Future lease payments are due on January 1 of each year of the leaseterm. The interest rate in the lease is 10%. What amount should Braun Company debit theequipment account on the date of acquisition. Round answer to the nearest dollar).$225,000$32.678$167,678O$152434Braun Company would not debit the equipment account because the equipment is being cased and notpurchased.

When an equipment is leased , the leased equipment is debited and lease liability is credited

Answered: ease payments of $35.000 with the first…

ease payments of $35.000 with the first pay 0. Future lease payments are due on January the lease is 10%. What amount should Braur e date of acquisition. (Round answer to the ne

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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Concept explainers

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

Question

Braun Company acquired a piece of equipment from Tipper Company under a lease agreement. The
lease requires six annual lease payments of $35.000 with the first payment due when the lease
begins, on January 1, 2020. Future lease payments are due on January 1 of each year of the lease
term. The interest rate in the lease is 10%. What amount should Braun Company debit the
equipment account on the date of acquisition. Round answer to the nearest dollar).
$225,000
$32.678
$167,678
O$152434
Braun Company would not debit the equipment account because the equipment is being cased and not
purchased.

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