Please explain proper steps by Step and Do Not Give Solution In Image Format And Fast Answering Please &Thanks In Advance ? Sandhill Corporation ("Sandhill") manufactures equipment with an estimated economic life of 14 years. On May 30, 2023,Sandhill leases it to Gadget Corporation ("Gadget") for a period of 10 years. Details of the lease are as follows: Equipmenthas a fair value and cost at the inception of the lease: $199,573. Guaranteed residual value: $23,000. Annual lease payment,due at beginning of each year: $25,000. Lease contains no renewal options and the equipment reverts to Sandhill at the endof the lease. Gadge Gadget's incremental interest rate, as well as implicit rate is 7%. ws Gadget uses straight-linedepreciation for similar equipment that it owns. Sandhill has determined that collectibility of lease payments is reasonablypredictable and that no additional costs will be incurred. Assume both companies follow ASPE.prepare journal entries for the lessee and the lessor at May 30, 2023. The inception of the lease, and at December 31, 2023,which is the year and for both the lessee and the LessorSandhill Corporation ("Sandhill") manufactures equipment with an estimated economic life of 14 years. On May 30, 2023, Sandhillleases it to Gadget Corporation ("Gadget") for a period of 10 years. Details of the lease are as follows:••●●...(b)cEquipment has a fair value and cost at the inception of the lease: $199,573,Guaranteed residual value: $23,000.Assume both companies follow ASPE.Annual lease payment, due at beginning of each year: $25,000.Lease contains no renewal options and the equipment reverts to Sandhill at the end of the lease.Gadget's incremental interest rate, as well as implicit rate is 7%.Gadget uses straight-line depreciation for similar equipment that it owns.Sandhill has determined that collectibility of lease payments is reasonably predictable and that no additional costs will beincurred.Prepare the journal entries for the4 Pessor at May 30, 2023, the inception of the lease, and at December 31, 2023, whichis the year end for both the lessee and lessor. (List all debit entries before credit entries. Credit account titles are automatically indentedwhen the amount is entered. Do not indent manually. Round answers to 0 decimal places, eg. 5,275. If no entry is required, select "Noentry for the account titles and enter 0 for the amounts)4Lessee:DateAccount Titles and ExplanationDate(To record lease payment)(To record interest)(To record depreciation expense)Show Transcribed TextAccount Titles and Explanation(To record inception of lease)(To record collection of lease payment)(To record interest)ĊDebitDebitCreditCredit

The lease contains no bargain purchase option and at the end of the lease the asset is supposed to…

Sandhill Corporation ("Sandhill") manufactures equipment with an estimated economic life of 14 years. On May 30, 2023, Sandhill leases it to Gadget Corporation ("Gadget") for a period of 10 years. Details of the lease are as follows: Equipment has a fair value and cost at the inception of the lease: $199,573. Guaranteed residual value: $23,000. Annual lease payment, due at beginning of each year: $25,000. Lease contains no renewal options and the equipment reverts to Sandhill at the end of the lease. Gadge Gadget's incremental interest rate, as well as implicit rate is 7%. ws Gadget uses straight-line depreciation for similar equipment that it owns. Sandhill has determined that collectibility of lease payments is reasonably predictable and that no additional costs will be incurred. Assume both companies follow ASPE. prepare journal entries for the lessee and the lessor at May 30, 2023. The inception of the lease, and at December 31, 2023, which is the year and for both the lessee and the Lessor

Sandhill Corporation ("Sandhill") manufactures equipment with an estimated economic life of 14 years. On May 30, 2023, Sandhill leases it to Gadget Corporation ("Gadget") for a period of 10 years. Details of the lease are as follows: Equipment has a fair value and cost at the inception of the lease: $199,573. Guaranteed residual value: $23,000. Annual lease payment, due at beginning of each year: $25,000. Lease contains no renewal options and the equipment reverts to Sandhill at the end of the lease. Gadge Gadget's incremental interest rate, as well as implicit rate is 7%. ws Gadget uses straight-line depreciation for similar equipment that it owns. Sandhill has determined that collectibility of lease payments is reasonably predictable and that no additional costs will be incurred. Assume both companies follow ASPE. prepare journal entries for the lessee and the lessor at May 30, 2023. The inception of the lease, and at December 31, 2023, which is the year and for both the lessee and the Lessor

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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