**Instructions**Keller Corporation (the lessee) entered into a general equipment lease with Dallo Company (the lessor) on January 1 of Year 1. The following information pertains to this lease agreement:1. The equipment reverts back to the lessor at the end of the lease, and there is no bargain purchase option.2. The lease term is 8 years and requires annual payments of $10,000 at the beginning of each year.3. The fair value of the equipment at lease inception is $100,000. Assume that the present value of lease payments discounted at a 10% interest rate is $58,684.19.4. The equipment has an estimated economic life of 20 years and has zero residual value at the end of this time.**Required:**Prepare the journal entry that Keller Corporation would make during the first year of the lease assuming that the lease is classified as an operating lease. ### General Journal TemplateThis template represents a standard format of a General Journal used in accounting. Below are the descriptions of each component of the journal:- **Date**: The column where the date of the accounting transaction is recorded. It indicates when the transaction took place.- **Account Title**: This section is used to list the accounts affected by the transaction. Accounts are typically listed in order of debits first, followed by credits.- **Post. Ref. (Posting Reference)**: This column is used for entering the ledger page number where the transaction has been posted. It aids in cross-referencing between the journal and the ledger.- **Debit**: The amount of money that is added to an account. In accounting terms, it may signify an increase in asset or expense accounts or a decrease in liability, equity, or income accounts.- **Credit**: The amount of money that is removed from an account. It usually indicates a decrease in asset or expense accounts or an increase in liability, equity, or income accounts.This template, with six rows available for entries, allows record-keeping and tracking of multiple financial transactions systematically.

Operating Lease: Operating Lease does not transfer substantially all the risk and rewards to…

Keller Corporation (the lessee) entered into a general equipment lease with Dallo Company (the lessor) on January 1 of Year 1. The following information pertains agreement: 1. The equipment reverts back to the lessor at the end of the lease, and there is no bargain purchase option. 2. The lease term is 8 years and requires annual payments of $10,000 at the beginning of each year. 3. The fair value of the equipment at lease inception is $100,000. Assume that the present value of lease payments discounted at a 10% interest rate is $58,684.19. A 4. The equipment has an estimated economic life of 20 years and has zero residual value at the end of this time. Required: Prepare the journal entry that Keller Corporation would make during the first year of the lease assuming that the lease is classified as an operating lease.

Keller Corporation (the lessee) entered into a general equipment lease with Dallo Company (the lessor) on January 1 of Year 1. The following information pertains agreement: 1. The equipment reverts back to the lessor at the end of the lease, and there is no bargain purchase option. 2. The lease term is 8 years and requires annual payments of $10,000 at the beginning of each year. 3. The fair value of the equipment at lease inception is $100,000. Assume that the present value of lease payments discounted at a 10% interest rate is $58,684.19. A 4. The equipment has an estimated economic life of 20 years and has zero residual value at the end of this time. Required: Prepare the journal entry that Keller Corporation would make during the first year of the lease assuming that the lease is classified as an operating lease.

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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he following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Ivanhoe Company, a lessee. Commencement date January 1, Annual lease payment due at the beginning of each year, beginning with January 1, $99,118 Residual value of equipment at end of lease term, guaranteed by the lessee $53,000 Expected residual value of equipment at end of lease term $48,000 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at January 1, $554,000 Lessor’s implicit rate 6 % Lessee’s incremental borrowing rate 6 % The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment.Click here to view factor tables. (a) Your answer is partially correct. Try again. Prepare an amortization schedule that would be suitable for the lessee for the lease term.…
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