The classification of lease and the accounting treatment and also provide necessary journal entries. Given information: Lease term is 5 years. Economic life of asset is 7 years. Fair value of the equipment is $60,000. Interest rate is 6% Annual lease payments are $11,198.

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Chapter 18, Problem 18.2E

To determine

The classification of lease and the accounting treatment and also provide necessary journal entries.

Given information:

Lease term is 5 years.

Economic life of asset is 7 years.

Fair value of the equipment is $60,000.

Interest rate is 6%

Annual lease payments are $11,198.

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