Kendall County entered into a lease agreement to finance computer equipment used in government offices. The lease covers three years, and county officials are reasonably certain that funding and approvals will be renewed annually. At the inception of the lease, a payment of $710,000 will be made; two additional annual lease payments of $710,000 are to be made near the end of each year. The total amount to be paid under this lease is $2,130,000. The lease arrangements implied an annual interest rate of 3 percent. Therefore, the present value of the lease at inception, including the initial payment, is $2,068,563. Assume that the fair value of the equipment at the inception of the lease is $2,120,000. Required Prepare entries required to record the inception of the lease in the General Fund, the debt service fund, and the governmental activities journal. Prepare entries required to record the payment at the end of the first year of the lease in both the debt service fund and governmental activities journal. c-1. Which financial statement prepared at the end of the first year would show both the asset and the liability related to this lease? c-2. What amount would the liability be reported at the end of the first year?

Kendall County entered into a lease agreement to finance computer equipment used in government offices. The lease covers three years, and county officials are reasonably certain that funding and approvals will be renewed annually. At the inception of the lease, a payment of $710,000 will be made; two additional annual lease payments of $710,000 are to be made near the end of each year. The total amount to be paid under this lease is $2,130,000. The lease arrangements implied an annual interest rate of 3 percent. Therefore, the present value of the lease at inception, including the initial payment, is $2,068,563. Assume that the fair value of the equipment at the inception of the lease is $2,120,000. Required Prepare entries required to record the inception of the lease in the General Fund, the debt service fund, and the governmental activities journal. Prepare entries required to record the payment at the end of the first year of the lease in both the debt service fund and governmental activities journal. c-1. Which financial statement prepared at the end of the first year would show both the asset and the liability related to this lease? c-2. What amount would the liability be reported at the end of the first year?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

I asked for S5-6
What Is Section 1031? A brief explanation on this?
E14.7
E14.2
What information is included in Form 10-K?
What is covered by Regulation S–K?
Problem 20-96 from pic.
ne NPV of go ərket..(Do nc ID