Sheridan 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. The annual lease payment is $44,000 at the beginning of each year, and Sheridan's incremental borrowing rate is 4%, which is the same as the lessor's implicit rate. Prepare all the necessary journal entries for Falls Company (the lessor) for 2025, assuming the equipment is carried at a cost of $288,000. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. 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.) Date Account Titles and Explanation 1/1/25 > > (To record the recognition of the revenue each period) (To record depreciation expense on the leased equipment) eTextbook and Media List of Accounts Debit Credit
Sheridan 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. The annual lease payment is $44,000 at the beginning of each year, and Sheridan's incremental borrowing rate is 4%, which is the same as the lessor's implicit rate. Prepare all the necessary journal entries for Falls Company (the lessor) for 2025, assuming the equipment is carried at a cost of $288,000. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. 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.) Date Account Titles and Explanation 1/1/25 > > (To record the recognition of the revenue each period) (To record depreciation expense on the leased equipment) eTextbook and Media List of Accounts Debit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Sheridan 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. The annual lease payment is $44,000 at the beginning
of each year, and Sheridan's incremental borrowing rate is 4%, which is the same as the lessor's implicit rate.
Prepare all the necessary journal entries for Falls Company (the lessor) for 2025, assuming the equipment is carried at a cost of
$288,000. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not
indent manually. 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.)
Date
Account Titles and Explanation
1/1/25
>
>
(To record the recognition of the revenue each period)
(To record depreciation expense on the leased
equipment)
eTextbook and Media
List of Accounts
Debit
Credit
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