Recording Operating Lease Entries-Lessor On January 1, 2020, Merick Inc. purchased a building for $4 million to be leased. The building is expected to have a 45-year life with no salvage value. The building was leased immediately by Kregor Construction for $260,000 a year payable January 1 of each year starting January 1, 2020. The lease term is five years with no renewal or purchase option reasonably expected to be exercised. There are no uncertainties surrounding collection. The implicit rate of the lease is 7% known by Kregor Construction. Required a. How would Merick Inc. classify the lease? b. Prepare the entries for Merick Inc. for 2020. Note: Round your answers to the nearest whole dollar. Account Name Dr. Date Jan. 1, 2020 ◆ Cr.

Recording Operating Lease Entries-Lessor On January 1, 2020, Merick Inc. purchased a building for $4 million to be leased. The building is expected to have a 45-year life with no salvage value. The building was leased immediately by Kregor Construction for $260,000 a year payable January 1 of each year starting January 1, 2020. The lease term is five years with no renewal or purchase option reasonably expected to be exercised. There are no uncertainties surrounding collection. The implicit rate of the lease is 7% known by Kregor Construction. Required a. How would Merick Inc. classify the lease? b. Prepare the entries for Merick Inc. for 2020. Note: Round your answers to the nearest whole dollar. Account Name Dr. Date Jan. 1, 2020 ◆ Cr.

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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