Kelly K. inc enters a lease agreement for a piece of equipment with a fair value of $45,000 under a 5 year lease on december 20,2021. The lease commences on January 1, 2022 and Kelly will return the equipment on December 31,2026. The equipment has a useful life of 7 yrs. Kelly made a lease payment of 5,000 on dec. 20,2021. The following annual payments in addition to the dec. 20, 2021 payment are required: Dес 31 2020 Dес 31 2023 Dес 31 2024 Dес 31 2025 Implicit rate is 9% Kelly incurs initial direct costs of 2,000 prior to 6000 5000 4000 commencement 3000 Assume it is an Operating lease No purchase options, lease incentives, guaranteed residual value, or transfer of ownership.

Kelly K. inc enters a lease agreement for a piece of equipment with a fair value of $45,000 under a 5 year lease on december 20,2021. The lease commences on January 1, 2022 and Kelly will return the equipment on December 31,2026. The equipment has a useful life of 7 yrs. Kelly made a lease payment of 5,000 on dec. 20,2021. The following annual payments in addition to the dec. 20, 2021 payment are required: Dес 31 2020 Dес 31 2023 Dес 31 2024 Dес 31 2025 Implicit rate is 9% Kelly incurs initial direct costs of 2,000 prior to 6000 5000 4000 commencement 3000 Assume it is an Operating lease No purchase options, lease incentives, guaranteed residual value, or transfer of ownership.

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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