Rockford Industries, a manufacturing company, signs a six-year lease on apackaging machine on January 1. The lease requires Rockford to make monthlylease payments of $12,000 with the first payment due December 31. Rockfordcould have financed a purchase of the machine with a 8% loan. a. Report theentries that Rockford Corporation would make on January 1 and December 31 torecord this lease assuming it is reported as an operating lease.

Operating lease the lessor allows the lessee to use the asset but retains ownership rights.

e payments of $12,000 with the first payment due December 31. Id have financed a purchase of the machine with a 8% loan. a. Rep ries that Rockford Corporation would make on January 1 and Dece ord this lease assuming it is reported as an operating lease.

e payments of $12,000 with the first payment due December 31. Id have financed a purchase of the machine with a 8% loan. a. Rep ries that Rockford Corporation would make on January 1 and Dece ord this lease assuming it is reported as an operating lease.

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 9RE: Use the information in RE20-3. Prepare the journal entries that Richie Company (the lessor) would...

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Use the information in RE20-3. Prepare the journal entries that Garvey Company would make in the first year of the lease assuming the lease is classified as a finance lease. However, assume that Garvey is now required to make the 65,949.37 payments on January 1 each year and that the fair value at the lease inception is now 275,000 (65,949:37 4:169865).
Use the information in RE20-3. Prepare the journal entries that Garvey Company would make in the first year of the lease assuming the lease is classified as a finance lease. Assume that Garvey is required to make payments on December 31 each year.
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