Rex Corporation (lessor) and Lee Company (lessee) agreed to a lease with the following information. • Rex's carrying value of the underlying asset (inventory item) was $192,000. • Lease term is four years, beginning January 1 of Year 1. Lease payments are made each January 1, beginning at the lease commencement. • Estimated useful life of the underlying asset is four years. Estimated residual value at the end of the lease is zero. • Sales price of the underlying asset on January 1 of Year 1 is $220,800. • Rex's implicit interest rate is 8% (known to Lee). • Rex paid commission and legal fees in securing the lease of $2,400 on January 1 of Year 1. • Rex expects to collect all payments from Lee. Required a. Compute the (1) annual lease payment calculated by the lessor and (2) the lease receivable to be capitalized by the lessor. Note: Round your answers to the nearest whole dollar. • Note: Do not use negative signs with your answers 1. Lease Payment: $0 2. Lease Receivable: $0 b. Provide the entries for the lessor on (1) January 1 and (2) December 31, of Year 1. Note: Round your answers to the nearest whole dollar.

Rex Corporation (lessor) and Lee Company (lessee) agreed to a lease with the following information. • Rex's carrying value of the underlying asset (inventory item) was $192,000. • Lease term is four years, beginning January 1 of Year 1. Lease payments are made each January 1, beginning at the lease commencement. • Estimated useful life of the underlying asset is four years. Estimated residual value at the end of the lease is zero. • Sales price of the underlying asset on January 1 of Year 1 is $220,800. • Rex's implicit interest rate is 8% (known to Lee). • Rex paid commission and legal fees in securing the lease of $2,400 on January 1 of Year 1. • Rex expects to collect all payments from Lee. Required a. Compute the (1) annual lease payment calculated by the lessor and (2) the lease receivable to be capitalized by the lessor. Note: Round your answers to the nearest whole dollar. • Note: Do not use negative signs with your answers 1. Lease Payment: $0 2. Lease Receivable: $0 b. Provide the entries for the lessor on (1) January 1 and (2) December 31, of Year 1. Note: Round your answers to the nearest whole dollar.

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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