Journal Entries for the Lessee Assignment | Top Universities
am Leasing Company signs an agreement on January 1. 2017 te lease equipment to De Manufacturing. The following information relates to the agreement
1. The term of the cancelable lewe is three years with no renewal option. The equipment has an expected seal life of 6 years.
2. The cost of the asset to the less is $5.000. The fair value of the asset on January 1, 2017 is 57,000.
3. The asset will revert to the lessor at the end of the lease term at which time it is expected to have a residual value of $3,500 which is not guaranteed.
4. Delta, the lessee, is responsible for all executory costs.
5. The agreement requires annual rental payments, beginning on January 1, 2017.
6. The collectability of the lease payments is reasonably predictable.
7. The asset is not specialized
8. The lessor has an implicit interest rate of 5%, the lessee has an incremental rate of 696 and the lessee is not aware of the lessors rate. 1. What is the lease type and why, for the: a. Lessee b. Lessor 2. Calculate the amount of the annual rental payment. 3. What amount would be recognized as Lease Liability at the inception of the lease? 4.
Prepare appropriate tables for the lessee for the lease term. 5. Prepare the journal entries for the lessee for 2017. required (Round all numbers to the nearest dollar): Get Accounting homework help today