Manufacturers Southern leasedhigh tech electronics equipment from international machines on January 1, 2024. international machines manufactured the equipment at a cost of $89,000. Manufacturers Southern's fiscal year ends December 31. Manufacturers Southern's fiscal year ends December 31. Lease term 2 years (8 quarterly periods) Quarterly rental payments $16,000 at the beginning of each period Economic life of asset 2 years Fair value of asset $117,590 Implicit interest rate 10%
Manufacturers Southern leasedhigh tech electronics equipment from international machines on January 1, 2024. international machines manufactured the equipment at a cost of $89,000. Manufacturers Southern's fiscal year ends December 31. Manufacturers Southern's fiscal year ends December 31. Lease term 2 years (8 quarterly periods) Quarterly rental payments $16,000 at the beginning of each period Economic life of asset 2 years Fair value of asset $117,590 Implicit interest rate 10%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Manufacturers Southern leasedhigh tech electronics equipment from international machines on January 1,
2024. international machines manufactured the equipment at a cost of $89,000. Manufacturers Southern's
fiscal year ends December 31. Manufacturers Southern's fiscal year ends December 31.
Lease term 2 years (8 quarterly periods)
Quarterly rental payments $16,000 at the beginning of each period
Economic life of asset 2 years
Fair value of asset $117,590
Implicit interest rate 10%
Required:
1. Show how International Machines determined the $16,000 quarterly lease payments.
2. Prepare appropriate entries for International Machines to record the lease at its beginning, January 1, 2024,
and the second lease payment on April 1, 2024](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0aee0e3d-a57d-4304-8930-413dab086e20%2Fbc782268-d492-491f-ba26-54aed38a7248%2Fa6i2uze_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Manufacturers Southern leasedhigh tech electronics equipment from international machines on January 1,
2024. international machines manufactured the equipment at a cost of $89,000. Manufacturers Southern's
fiscal year ends December 31. Manufacturers Southern's fiscal year ends December 31.
Lease term 2 years (8 quarterly periods)
Quarterly rental payments $16,000 at the beginning of each period
Economic life of asset 2 years
Fair value of asset $117,590
Implicit interest rate 10%
Required:
1. Show how International Machines determined the $16,000 quarterly lease payments.
2. Prepare appropriate entries for International Machines to record the lease at its beginning, January 1, 2024,
and the second lease payment on April 1, 2024
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