FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:Spartan Corporation leased a building from Dalton Brothers Inc. Dalton Brothers spent $20 million to complete the
construction of the building on January 1, 2024. The lease agreement specified six equal payments of $5,510,578 at the
end of each year. The useful life of the building was expected to be six years with no residual value. Dalton Brothers'
implicit interest rate was 10%.
Required:
1. How would Spartan classify this lease?
2. Prepare the journal entry for Spartan Corporation at the beginning of the lease on January 1, 2024.
3. Prepare the journal entry for Dalton Brothers at the beginning of the lease on January 1, 2024.
4. Prepare the appropriate entries related to the lease on December 31, 2024.
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