Swifty Corporation agrees on January 1, 2020, to lease equipment from Packers, Inc. for 3 years. The lease calls for annual lease payments of $10,500 at the beginning of each year. The lease does not transfer ownership, contain a bargain purchase option, and is rot a specialized asset. In addition, the economic life of the equipment is 10 years, and the present value of the lease payments is less than 90% of the fair value of the equipment. Prepare Swifty' journal entries on January 1, 2020 (commencement of the operating lease), and on December 31, 2020. Assume the implicit rate used by the lessor is 9%, and this is known to Swifty. (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. 5,275. Record journal entries in the order presented in the problem.)
Swifty Corporation agrees on January 1, 2020, to lease equipment from Packers, Inc. for 3 years. The lease calls for annual lease payments of $10,500 at the beginning of each year. The lease does not transfer ownership, contain a bargain purchase option, and is rot a specialized asset. In addition, the economic life of the equipment is 10 years, and the present value of the lease payments is less than 90% of the fair value of the equipment. Prepare Swifty' journal entries on January 1, 2020 (commencement of the operating lease), and on December 31, 2020. Assume the implicit rate used by the lessor is 9%, and this is known to Swifty. (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. 5,275. Record journal entries in the order presented in the problem.)
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 12P: Comprehensive Landlord Company and Tenant Company enter into a noncancelable, direct financing lease...
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![Swifty Corporation agrees on January 1, 2020, to lease equipment from Packers, Inc. for 3 years. The lease calls for annual lease
payments of $10,500 at the beginning of each year. The lease does not transfer ownership, contain a bargain purchase option, and is
not a specialized asset. In addition, the economic life of the equipment is 10 years, and the present value of the lease payments is less
than 90% of the fair value of the equipment.
Prepare Swifty' journal entries on January 1, 2020 (commencement of the operating lease), and on December 31, 2020. Assume the
implicit rate used by the lessor is 9%, and this is known to Swifty. (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. 5,275. Record journal entries in the order presented in the problem.)
Click here to view factor tables.
Date
Account Titles and Explanation
(To record lease liability)
(To record lease payment)
MacBook Air
Debit
Credit](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1de48ccf-b028-4e91-916b-bb0b56d3b80f%2F613ef3f7-02c2-4580-a9c1-ded0f359a0c1%2Fzjza77l_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Swifty Corporation agrees on January 1, 2020, to lease equipment from Packers, Inc. for 3 years. The lease calls for annual lease
payments of $10,500 at the beginning of each year. The lease does not transfer ownership, contain a bargain purchase option, and is
not a specialized asset. In addition, the economic life of the equipment is 10 years, and the present value of the lease payments is less
than 90% of the fair value of the equipment.
Prepare Swifty' journal entries on January 1, 2020 (commencement of the operating lease), and on December 31, 2020. Assume the
implicit rate used by the lessor is 9%, and this is known to Swifty. (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. 5,275. Record journal entries in the order presented in the problem.)
Click here to view factor tables.
Date
Account Titles and Explanation
(To record lease liability)
(To record lease payment)
MacBook Air
Debit
Credit
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