Question
Elf Leasing purchased a machine for $600,000 and leased it to IGA, Inc. on January 1,...
Elf Leasing purchased a machine for $600,000 and leased it to
IGA, Inc. on January 1, 2018.
| Lease description: | |
| Quarterly rental payments | $31,101 at beginning of each period |
| Lease term | 6 years (24 quarters) |
| No residual value; no BPO | |
| Economic life of machine | 6 years |
| Implicit interest rate and lessee’s incremental borrowing rate | 8% |
| Fair value of asset | $600,000 |
Required:
Prepare appropriate entries for both IGA and Elf Leasing from the
beginning of the lease through the second rental payment on April
1, 2018. Amortization is recorded at the end of each fiscal year
(December 31). (If no entry is required for a
transaction/event, select "No journal entry required" in the first
account field. Round your answers to the nearest whole dollar
amounts.)
Homework Answers
Answer #1
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