The details of the equipment lease agreement that Taj Corp. (lessee) recently entered into with Stanger Leasing (lessor) are: Commencement date: January 1, 2019. Term of lease: 12 months. Payments: $1,000 per month first due at the commencement date. Other: Title does not transfer and the lease does not include any renewal or purchase options. Interest rate implicit in the lease: Lessee not able to readily determine. Incremental borrowing rate: 9% per annum (0.75% per month). Estimated useful life of equipment: 8 years. Depreciation method: Straight-line. Year end: December 31. Assume that Taj Corp. does not elect to expense leases of a short-term nature. Prepare the journal entry for January 31, 2019.
The details of the equipment lease agreement that Taj Corp. (lessee) recently entered into with Stanger Leasing (lessor) are: Commencement date: January 1, 2019. Term of lease: 12 months. Payments: $1,000 per month first due at the commencement date. Other: Title does not transfer and the lease does not include any renewal or purchase options. Interest rate implicit in the lease: Lessee not able to readily determine. Incremental borrowing rate: 9% per annum (0.75% per month). Estimated useful life of equipment: 8 years. Depreciation method: Straight-line. Year end: December 31. Assume that Taj Corp. does not elect to expense leases of a short-term nature. Prepare the journal entry for January 31, 2019.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter9: Long-term Liabilities
Section: Chapter Questions
Problem 17MCQ: Which of the following statements regarding the new accounting rules, which take effect in 2019, for...
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![The details of the equipment lease agreement that Taj Corp. (lessee) recently entered into with Stanger
Leasing (lessor) are:
Commencement date: January 1, 2019.
■ Term of lease: 12 months.
Payments: $1,000 per month first due at the commencement date.
Other: Title does not transfer and the lease does not include any renewal or purchase options.
Interest rate implicit in the lease: Lessee not able to readily determine.
Incremental borrowing rate: 9% per annum (0.75% per month).
Estimated useful life of equipment: 8 years.
Depreciation method: Straight-line.
Year end: December 31.
Assume that Taj Corp. does not elect to expense leases of a short-term nature.
Prepare the journal entry for January 31, 2019.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0bd6a818-7e37-4788-a935-d00731e924b3%2F9ca40129-40e3-4527-a8df-5be87d52ab12%2Fijc6uf_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The details of the equipment lease agreement that Taj Corp. (lessee) recently entered into with Stanger
Leasing (lessor) are:
Commencement date: January 1, 2019.
■ Term of lease: 12 months.
Payments: $1,000 per month first due at the commencement date.
Other: Title does not transfer and the lease does not include any renewal or purchase options.
Interest rate implicit in the lease: Lessee not able to readily determine.
Incremental borrowing rate: 9% per annum (0.75% per month).
Estimated useful life of equipment: 8 years.
Depreciation method: Straight-line.
Year end: December 31.
Assume that Taj Corp. does not elect to expense leases of a short-term nature.
Prepare the journal entry for January 31, 2019.
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