On January 1, 2021, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 4%. The contract calls for four rent payments of $10,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $90,000 and were expected to have a useful life of five years with no residual value. Both firms record amortization and depreciation semiannually. Required: Prepare the appropriate entries for both (a) the lessee and (b) the lessor from the beginning of the lease through the end of 2021.
On January 1, 2021, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 4%. The contract calls for four rent payments of $10,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $90,000 and were expected to have a useful life of five years with no residual value. Both firms record amortization and depreciation semiannually. Required: Prepare the appropriate entries for both (a) the lessee and (b) the lessor from the beginning of the lease through the end of 2021.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:E 15-17
Lessee and lessor; operating lease
• LO15-4
On January 1, 2021, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers under a two-year
operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest
rate of 4%. The contract calls for four rent payments of $10,000 each, payable semiannually on June 30 and December 31 each
year. The computers were acquired by ComputerWorld at a cost of $90,000 and were expected to have a useful life of five years
with no residual value. Both firms record amortization and depreciation semiannually.
Required:
Prepare the appropriate entries for both (a) the lessee and (b) the lessor from the beginning of the lease through the end of 2021.
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