On January 1, 2020, Ashe Company entered into a 5-year equipment lease (with no renewal options) requiring payments of $21,000, with the first payment due immediately. The lessor’s implicit interest rate, known to Ashe, is 6%. Ownership of the equipment remains with the lessor at expiration of the lease. There is no option to purchase the property at the end of the lease term and the equipment is expected to have no residual value. The equipment has an estimated economic life of 5 years. Lease classification is: Record JEs for first two years assuming lessee
On January 1, 2020, Ashe Company entered into a 5-year equipment lease (with no renewal options) requiring payments of $21,000, with the first payment due immediately. The lessor’s implicit interest rate, known to Ashe, is 6%. Ownership of the equipment remains with the lessor at expiration of the lease. There is no option to purchase the property at the end of the lease term and the equipment is expected to have no residual value. The equipment has an estimated economic life of 5 years. Lease classification is: Record JEs for first two years assuming lessee
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2020, Ashe Company entered into a 5-year equipment lease (with no renewal options) requiring payments of $21,000, with the first payment due immediately. The lessor’s implicit interest rate, known to Ashe, is 6%. Ownership of the equipment remains with the lessor at expiration of the lease. There is no option to purchase the property at the end of the lease term and the equipment is expected to have no residual value. The equipment has an estimated economic life of 5 years.
Lease classification is:
Record JEs for first two years assuming lessee
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