Apparel Leasing Company signs a lease agreement on January 1, 2021, to lease equipment to Oman Company. The term of the non-cancelable lease is & years, and payments are required at the end of each year. The following information related to this agreement: 1. The equipment has a cost and fair value of $28,500,000 to Apparel, an estimated useful life of 10 years, and no residual value at the end of that time. Annual lease rental is $4,324,818. 2. Apparel Company desires to earn an 8% return on its investment. Instructions: A) Prepare an amortization schedule for the lessor for 2021 and 2022. B) Prepare the journal entries on the lessor's books on January 1, 2021 and December 31, 2021.
Apparel Leasing Company signs a lease agreement on January 1, 2021, to lease equipment to Oman Company. The term of the non-cancelable lease is & years, and payments are required at the end of each year. The following information related to this agreement: 1. The equipment has a cost and fair value of $28,500,000 to Apparel, an estimated useful life of 10 years, and no residual value at the end of that time. Annual lease rental is $4,324,818. 2. Apparel Company desires to earn an 8% return on its investment. Instructions: A) Prepare an amortization schedule for the lessor for 2021 and 2022. B) Prepare the journal entries on the lessor's books on January 1, 2021 and December 31, 2021.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 2E: Lessee Accounting with Payments Made at Beginning of Year Adden Company signs a lease agreement...
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Apparel Leasing Company signs a lease agreement on January 1, 2021, to lease equipment to Oman Company. The term of the non-cancelable lease is & years, and payments are
required at the end of each year. The following information related to this agreement:
1. The equipment has a cost and fair value of $28,500,000 to Apparel, an estimated useful life of 10 years, and no residual value at the end of that time. Annual lease rental is
$4,324,818.
2. Apparel Company desires to earn an 8% return on its investment.
Instructions:
A) Prepare an amortization schedule for the lessor for 2021 and 2022.
B) Prepare the journal entries on the lessor's books on January 1, 2021 and December 31, 2021.
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