On 1/1/21, Elliott Company leased machinery with a fair value of $1,185,000 from Greene Corporation. The cost of the machinery to Greene was S850,000. The lease is for 8 years; the expected life of the machinery is 6 years. Elliott guaranteed a residual of S15,000 but expects the value of the residual to be only $10,000 at the end of the lease term. The rate used by Greene to set lease payments was 6%. What journal entries will Elliott make in 2021 and 2022? What will Elliott report as its lease liability at 12/31/22?
On 1/1/21, Elliott Company leased machinery with a fair value of $1,185,000 from Greene Corporation. The cost of the machinery to Greene was S850,000. The lease is for 8 years; the expected life of the machinery is 6 years. Elliott guaranteed a residual of S15,000 but expects the value of the residual to be only $10,000 at the end of the lease term. The rate used by Greene to set lease payments was 6%. What journal entries will Elliott make in 2021 and 2022? What will Elliott report as its lease liability at 12/31/22?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 10GI: Owens Company leased equipment for 4 years at 50,000 a year with an option to renew the lease for 6...
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![On 1/1/21, Elliott Company leased machinery with a fair value of $1,185,000 from Greene
Corporation. The cost of the machinery to Greene was S850,000.
The lease is for 8 years; the expected life of the machinery is 6 years. Elliott guaranteed a residual of
S15,000 but expects the value of the residual to be only $10,000 at the end of the lease term. The
rate used by Greene to set lease payments was 6%.
What journal entries will Elliott make in 2021 and 2022? What will Elliott report as its lease liability at
12/31/22?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc9c71fe8-196a-4768-9f6a-d39ed430afd1%2F61d305bb-85c8-441e-bf70-210e8bd3c1ef%2F39lo53t_processed.jpeg&w=3840&q=75)
Transcribed Image Text:On 1/1/21, Elliott Company leased machinery with a fair value of $1,185,000 from Greene
Corporation. The cost of the machinery to Greene was S850,000.
The lease is for 8 years; the expected life of the machinery is 6 years. Elliott guaranteed a residual of
S15,000 but expects the value of the residual to be only $10,000 at the end of the lease term. The
rate used by Greene to set lease payments was 6%.
What journal entries will Elliott make in 2021 and 2022? What will Elliott report as its lease liability at
12/31/22?
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