Question

Grouper Corporation leases equipment from Falls Company on January 1, 2017. The lease agreement does not transfer ownership, contain a bargain purchase option, and is not a specialized asset. It covers 3 years of the equipment’s 8-year useful life, and the present value of the lease payments is less than 90% of the fair value of the asset leased. The annual lease payment is $36,000 at the beginning of each year, and Kingston’s incremental borrowing rate is 8%, which is the same as the lessor’s implicit rate.

Prepare all the necessary journal entries for Falls Company (the lessor) for 2017, assuming the equipment is carried at a cost of $232,000

Answer 1

Answer :-

Prepare all the necessary journal entries for Falls Company (the lessor) for 2017, assuming the equipment is carried at a cost of $232,000 :-

Date	Particulars	Debit	Credit
January 1, 2017	Cash / Bank	$36,000
	To rent revenue		$36,000
December 31, 2017	Rent revenue	$36,000
	To profit and loss		$36,000
	( To record revenue transferred to profit and loss )

• No solidification's are happy concerning account rent , so it ought to be considered as working lease .
• Entries in the book of lessor.
• No compelling reason to consider intrigue .