Riverbed Corporation leases equipment from Falls Company on January 1, 2025. The lease agreement does not transfer ownership, contain a bargain purchase option, and is not a specialized asset. It covers 3 years of the equipment's 8-year useful life, and the present value of the lease payments is less than 90% of the fair value of the asset leased. Prepare Riverbed's journal entries on January 1, 2025, and December 31, 2025. Assume the annual lease payment is $41,000 at the beginning of each year, and Riverbed's incremental borrowing rate is 5%, which is the same as the lessor's implicit rate. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, eg. 5,265. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem.) Click here to view factor tab Date 1/1/25 12/31/25 12/31/25 Account Titles and Explanation Cash Unearned Lease Revenue (To record lease liability) Unearned Lease Revenue (To record lease payment) Debit 100 [ Credit
Riverbed Corporation leases equipment from Falls Company on January 1, 2025. The lease agreement does not transfer ownership, contain a bargain purchase option, and is not a specialized asset. It covers 3 years of the equipment's 8-year useful life, and the present value of the lease payments is less than 90% of the fair value of the asset leased. Prepare Riverbed's journal entries on January 1, 2025, and December 31, 2025. Assume the annual lease payment is $41,000 at the beginning of each year, and Riverbed's incremental borrowing rate is 5%, which is the same as the lessor's implicit rate. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, eg. 5,265. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem.) Click here to view factor tab Date 1/1/25 12/31/25 12/31/25 Account Titles and Explanation Cash Unearned Lease Revenue (To record lease liability) Unearned Lease Revenue (To record lease payment) Debit 100 [ Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Riverbed Corporation leases equipment from Falls Company on January 1, 2025. The lease agreement does not transfer ownership,
contain a bargain purchase option, and is not a specialized asset. It covers 3 years of the equipment's 8-year useful life, and the present
value of the lease payments is less than 90% of the fair value of the asset leased.
Prepare Riverbed's journal entries on January 1, 2025, and December 31, 2025. Assume the annual lease payment is $41,000 at the
beginning of each year, and Riverbed's incremental borrowing rate is 5%, which is the same as the lessor's implicit rate. (List all debit
entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. For
calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, e.g. 5,265. If no
entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the
problem.)
Click here to view factor tab
Date
1/1/25
12/31/25
12/31/25
Account Titles and Explanation
Cash
Unearned Lease Revenue
(To record lease liability)
Unearned Lease Revenue
(To record lease payment)
Debit
Credit
100.00
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