sultan company leased machinery from Fatima Inc. on Jan 1, 2021. The lease was recorded as a finance lease and cost 60,000. Annual rentals Of 17,208 are to be paid each year end (December). The lease is for 4 years and it has no residual value. Sultan borrowing rate is 10%. The economic life is 4 years. The first payment is Jan 1 2021. The second and subsequent payments are on 31 December (year end). a. Is this a finance lease? Explain why b. Record the journal entry for the lessee for the initial or beginning of lease using pv of 3.48685

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Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.