STerms of a lease agreement and related facts were as follows:a. The lease asset had a retail cash selling price of $100,000. Its useful life was six years with no residual value(straight-line depreciation).b. Annual lease payments at the beginning of each year were $20,873, beginning January 1.c. Lessor's implicit rate when calculating annual rental payments was 10%.d. Costs of $2,062 for legal fees for the lease execution were the responsibility of the lessor.Required:Prepare the appropriate entries for the lessor to record the lease, the initial payment at its beginning, and at theDecember 31 fiscal year-end under each of the following three independent assumptions:1. The lease term is three years and the lessor paid $100,000 to acquire the asset (operating lease).2. The lease term is six years and the lessor paid $100,000 to acquire the asset. Also assume that adjusting the leasereceivable (net investment) by initial direct costs reduces the effective rate of interest to 9%.3. The lease term is six years and the lessor paid $85,000 to acquire the asset.Complete this question by entering your answers in the tabs below.Required Required Required123The lease term is three years and the lessor paid $100,000 to acquire the asset (operatinglease) prepare the appropriate entries for the lessor to record the lease, the initial paymentat its beginning, and at the December 31 fiscal year-end.Note: If no entry is required for a transaction/event, select "No journal entry required" inthe first account field. Round your intermediate and final answers to nearest whole dollar.Show less▲No1DateJanuary 01 CashGeneral JournalDeferred lease revenue3Debit20,873Credit20,8732January 01Deferred lease revenue2,062Cash2,0623December 31 Depreciation expense16,667XAccumulated depreciation×16,667X4December 31 Deferred lease revenueLease revenue☑20,873X×20,873X5December 31××< Required 1Required 2 >

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Terms of a lease agreement and related facts were as follows: a. The lease asset had a retail cash selling price of $100,000. Its useful life was six years with no residual value (straight-line depreciation). b. Annual lease payments at the beginning of each year were $20,873, beginning January 1. c. Lessor's implicit rate when calculating annual rental payments was 10%. d. Costs of $2,062 for legal fees for the lease execution were the responsibility of the lessor.

Terms of a lease agreement and related facts were as follows: a. The lease asset had a retail cash selling price of $100,000. Its useful life was six years with no residual value (straight-line depreciation). b. Annual lease payments at the beginning of each year were $20,873, beginning January 1. c. Lessor's implicit rate when calculating annual rental payments was 10%. d. Costs of $2,062 for legal fees for the lease execution were the responsibility of the lessor.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Terms of a lease agreement and related facts were as follows: a. The lease asset had a retail cash selling price of $100,000. Its useful life was six years with no residual value (straight-line depreciation). b. Annual lease payments at the beginning of each year were $20,873, beginning January 1. c. Lessor's implicit rate when calculating annual rental payments was 10%. d. Costs of $2,062 for legal fees for the lease execution were the responsibility of the lessor. Required: Prepare the appropriate entries for the lessor to record the lease, the initial payment at its beginning, and at the December 31 fiscal year-end under each of the following three independent assumptions: 1. The lease term is three years and the lessor paid $100,000 to acquire the asset (operating lease). 2. The lease term is six years and the lessor paid $100,000 to acquire the asset. Also assume that adjusting the lease receivable (net investment) by initial direct costs reduces the effective rate of interest to…
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