Kate Co. leased a warehouse from Big Dave Industries on July 1, 2021, in a finance lease. The present value of the lease payments discounted at 10% was $162,217. Ten annual lease payments of $24,000 are due each July 1, beginning July 1, 2021. Big Dave had constructed the building recently for $132,000 and its retail fair value was $162,217. Required: Assuming that control of the warehouse building is transferred to Kate Co. at the beginning of the lease. Prepare the two journal entries to record the lease by Big Dave at July 1, 2021.
Kate Co. leased a warehouse from Big Dave Industries on July 1, 2021, in a finance lease. The present value of the lease payments discounted at 10% was $162,217. Ten annual lease payments of $24,000 are due each July 1, beginning July 1, 2021. Big Dave had constructed the building recently for $132,000 and its retail fair value was $162,217. Required: Assuming that control of the warehouse building is transferred to Kate Co. at the beginning of the lease. Prepare the two journal entries to record the lease by Big Dave at July 1, 2021.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Kate Co. leased a warehouse from Big Dave Industries on July 1, 2021, in a finance lease. The present value of the lease payments discounted at 10% was $162,217. Ten annual lease payments of $24,000 are due each July 1, beginning July 1, 2021. Big Dave had constructed the building recently for $132,000 and its retail fair value was $162,217.
Required: Assuming that control of the warehouse building is transferred to Kate Co. at the beginning of the lease. Prepare the two
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