The Lessor Corporation leases equipment to Lessee Corporation beginning January 1, 2022. The following information is available: 1.The lease term is 6 years; the lease requires equal payments of $90,000 to be made at the beginning of each year (first payment due January 1, 2022). 2.The cost (and market value) of the equipment is $420,000; the equipment has an estimated life of 6 years and has a zero estimated residual value at the end of that time. Both companies use straight-line depreciation. 3.The interest rate implicit in the lease is 10%. Lessee is aware of this rate. Required: A.Prepare the entry or entries required for Lessee on January 1, 2022. B. Prepare entry or entries required for Lessee on December  1, 2022. C. Prepare entry or entries required for Lessee on January 1, 2023

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The Lessor Corporation leases equipment to Lessee Corporation beginning January 1, 2022. The following information is available: 1.The lease term is 6 years; the lease requires equal payments of $90,000 to be made at the beginning of each year (first payment due January 1, 2022). 2.The cost (and market value) of the equipment is $420,000; the equipment has an estimated life of 6 years and has a zero estimated residual value at the end of that time. Both companies use straight-line depreciation. 3.The interest rate implicit in the lease is 10%. Lessee is aware of this rate. Required: A.Prepare the entry or entries required for Lessee on January 1, 2022. B. Prepare entry or entries required for Lessee on December  1, 2022. C. Prepare entry or entries required for Lessee on January 1, 2023. D Determine the interest expense for 2021 for Lessee.
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