Kaan Co. signed a 4-year non-cancellable lease agreement for a machine on January 1, 2021. The lease agreement requires a lease payment of 42.000 s beginning on 31 December 2021. The lessee's incremental borrowing rate is %12. The net present value of the payments is 151.400,60 S. The machine has an estimated useful life of 5 years with no residual value. a. Make the necessary journal entry to recognize the leased asset and lease liability on January 1, 2021. b. Make the journal entry for the lease payment on 31 December 2022 (end of the second year). c. Make the depreciation entry for the leased asset on 31 December 2022. pas d. Calculate the interest expense for the leasing transaction for the year 2023 (third year, do not make any journal entry, only show the calculation and interest expense). 4
Kaan Co. signed a 4-year non-cancellable lease agreement for a machine on January 1, 2021. The lease agreement requires a lease payment of 42.000 s beginning on 31 December 2021. The lessee's incremental borrowing rate is %12. The net present value of the payments is 151.400,60 S. The machine has an estimated useful life of 5 years with no residual value. a. Make the necessary journal entry to recognize the leased asset and lease liability on January 1, 2021. b. Make the journal entry for the lease payment on 31 December 2022 (end of the second year). c. Make the depreciation entry for the leased asset on 31 December 2022. pas d. Calculate the interest expense for the leasing transaction for the year 2023 (third year, do not make any journal entry, only show the calculation and interest expense). 4
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 10MC: On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring...
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning