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On 12-31-20, C leased a machine with a useful life of 6 years. The noncancelable lease agreement required C to make 4 annual lease payments of $25,000 starting 12-31-21. After making the last payment, C will retain the machine. C’s borrowing rate on 12-31-20 was 4%. C uses a straight-line amortization method (no residual value) and only prepares AJEs every December 31. Determine if this is a long-term finance lease or a long-term operating lease and then prepare the lease-related entries C should make on: 12-31-20 12-31-21 12-31-22 12-31-23 12-31-24 12-31-25 12-31-26

On 12-31-20, C leased a machine with a useful life of 6 years. The noncancelable lease agreement required C to make 4 annual lease payments of $25,000 starting 12-31-21. After making the last payment, C will retain the machine. C’s borrowing rate on 12-31-20 was 4%. C uses a straight-line amortization method (no residual value) and only prepares AJEs every December 31. Determine if this is a long-term finance lease or a long-term operating lease and then prepare the lease-related entries C should make on: 12-31-20 12-31-21 12-31-22 12-31-23 12-31-24 12-31-25 12-31-26

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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  1. ) On 12-31-20, C leased a machine with a useful life of 6 years. The noncancelable lease agreement required C to make 4 annual lease payments of $25,000 starting 12-31-21. After making the last payment, C will retain the machine. C’s borrowing rate on 12-31-20 was 4%. C uses a straight-line amortization method (no residual value) and only prepares AJEs every December 31. Determine if this is a long-term finance lease or a long-term operating lease and then prepare the lease-related entries C should make on:
  2. 12-31-20
  3. 12-31-21
  4. 12-31-22
  5. 12-31-23
  6. 12-31-24
  7. 12-31-25
  8. 12-31-26
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