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FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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  1. Present Value Calculation
  2. Amortization Schedule
  3. Journal entries

Please include all steps of calcualtions for my reference. Thanks!

Leased Asset
On January 1, 2020, Aylmer decided to lease a machine. The accountant at the time did not
record this asset NO TRANSACTIONS relating to leases were recorded. The following
information pertains to the leased machine:
• The lease term is 6 years and the economic life of the asset is 7 years.
• The annual lease payment is $25,600. In addition to the lease payment, annual executory
costs (insurance) of $890 must be made.
• Interest rate associated with this lease is 4%.
Make the appropriate calculations and requirements for reconciling the lease information. Then
prepare all the appropriate entries (including setup up the asset, the liability and any payments
and interest).
Transcribed Image Text:Leased Asset On January 1, 2020, Aylmer decided to lease a machine. The accountant at the time did not record this asset NO TRANSACTIONS relating to leases were recorded. The following information pertains to the leased machine: • The lease term is 6 years and the economic life of the asset is 7 years. • The annual lease payment is $25,600. In addition to the lease payment, annual executory costs (insurance) of $890 must be made. • Interest rate associated with this lease is 4%. Make the appropriate calculations and requirements for reconciling the lease information. Then prepare all the appropriate entries (including setup up the asset, the liability and any payments and interest).
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