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no entry in the books of the lesse

no entry in the books of the lesse

FINANCIAL ACCOUNTING
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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Why is there no entry in the books of the lesse on Jan. 1, 20x1 given this problem? Please explain.

On January 1, 20x1, Lessor acquires a machine for PIM and immediately leases it out to Lessee under a 3-year non-cancellable lease. Lessor incurs initial direct costs of in negotiating the lease. The estimated useful life of the machine is 10 years with no residual value. The lease is an operating lease to both Lessor and Lessee. The lease payments, payable at each year-end, are as follows: Year Rentals 20x1 145,000 20x2 115,000 20x3 100,000
Transcribed Image Text:On January 1, 20x1, Lessor acquires a machine for PIM and immediately leases it out to Lessee under a 3-year non-cancellable lease. Lessor incurs initial direct costs of in negotiating the lease. The estimated useful life of the machine is 10 years with no residual value. The lease is an operating lease to both Lessor and Lessee. The lease payments, payable at each year-end, are as follows: Year Rentals 20x1 145,000 20x2 115,000 20x3 100,000
Books of Lessor Books of Lessee 11/x1 Machinery and Equipment 1.09M Cash-Modified Disbursement 13 1/1/x1 No entry System (MDS), Regular 1.09M
Transcribed Image Text:Books of Lessor Books of Lessee 11/x1 Machinery and Equipment 1.09M Cash-Modified Disbursement 13 1/1/x1 No entry System (MDS), Regular 1.09M
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