On January 1, 2017, Irwin Animation sold a truck to Peete Finance for $35,000 and immediately leased it back. The truck was carried on Irwin's books at $28,000. The terr the lease is 5 years, there is no bargain purchase option, and title does not transfer to Irwin at lease-end. The lease requires 5 equal rental payments of $8,309 at the end each year (first payment on January 1, 2018). The appropriate rate of interest is 6%, the truck has a useful life of 5 years, with no expected residual value at the end of the term. Prepare Irwin's 2017 journal entries assuming these new facts. Must use factor table.

On January 1, 2017, Irwin Animation sold a truck to Peete Finance for $35,000 and immediately leased it back. The truck was carried on Irwin's books at $28,000. The terr the lease is 5 years, there is no bargain purchase option, and title does not transfer to Irwin at lease-end. The lease requires 5 equal rental payments of $8,309 at the end each year (first payment on January 1, 2018). The appropriate rate of interest is 6%, the truck has a useful life of 5 years, with no expected residual value at the end of the term. Prepare Irwin's 2017 journal entries assuming these new facts. Must use factor table.

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter2: Income Tax Concepts

Section: Chapter Questions

Problem 51P

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