LeBron James (LBJ) Corporation agrees on January 1, 2025, to lease equipment from Cullumber, Inc. for 3 years. The lease calls for annual lease payments of $18,000 at the beginning of each year. The lease does not transfer ownership, nor does it contain a bargain purchase option, and is not a specialized asset. In addition, the useful life of the equipment is 10 years, and the present value of the lease payments is less than 90% of the fair value of the equipment. Prepare LBJ's journal entries on January 1, 2025 (commencement of the operating lease), and on December 31, 2025. Assume the implicit rate used by the lessor is unknown, and LBJ's incremental orrowing rate is 6%. (Credit account titles automatically indented when the amount

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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LeBron James (LBJ) Corporation agrees on
January 1, 2025, to lease equipment from
Cullumber, Inc. for 3 years. The lease calls
for annual lease payments of $18,000 at
the beginning of each year. The lease does
not transfer ownership, nor does it contain
a bargain purchase option, and is not a
specialized asset. In addition, the useful life
of the equipment is 10 years, and the
present value of the lease payments is less
than 90% of the fair value of the
equipment.
Prepare LBJ's journal entries on January 1,
2025 (commencement of the operating
lease), and on December 31, 2025. Assume
the implicit rate used by the lessor is
unknown, and LBJ's incremental
Horrowing rate is 6%. (Credit account titles
automatically indented when the amount
is entered. Do not indent manually. If no entrv
Transcribed Image Text:LeBron James (LBJ) Corporation agrees on January 1, 2025, to lease equipment from Cullumber, Inc. for 3 years. The lease calls for annual lease payments of $18,000 at the beginning of each year. The lease does not transfer ownership, nor does it contain a bargain purchase option, and is not a specialized asset. In addition, the useful life of the equipment is 10 years, and the present value of the lease payments is less than 90% of the fair value of the equipment. Prepare LBJ's journal entries on January 1, 2025 (commencement of the operating lease), and on December 31, 2025. Assume the implicit rate used by the lessor is unknown, and LBJ's incremental Horrowing rate is 6%. (Credit account titles automatically indented when the amount is entered. Do not indent manually. If no entrv
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