Three different lease transactions are presented below for Blossom Enterprises. Assume that all lease transactions start on January 1,2024. Blossom does not receive title to the properties, either during the lease term or at the end of it. The yearly rental for each ofthe leases is paid at the beginning of each year. Blossom Enterprises prepares its financial statements using ASPE.Lease termEstimated economic lifeYearly rental paymentFair market value of leased assetPresent value of lease rental paymentsInterest rateDateJan. 1Dec. 31 vJan. 1Account TitlesAssume that Blossom Enterprises has purchased the vehicle for $72,600 instead of leasing it and that the amount borrowed was$72,600 at 8% interest, with interest payable at the end of each year. Prepare the entries for 2024. (List all debit entries before creditentries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select"No Entry" for the account titles and enter O for the amounts. Record entries in the order displayed in the problem statement.)Equipment Rental ExpenseManufacturingEquipment5 years15 years$12,000$84,000$54,180Cash(To record interest payment.)3.5%(To record depreciation expense.)Vehicles6 years7 years$12,840$72,600$67,3084%OfficeEquipment3 years6 years$3,330$15,000$8,5808%Debit12,000Credit12,000

Journal entries refer to the recording of business transactions in the debit and credit format that…

Three different lease transactions are presented below for Blossom Enterprises. Assume that all lease transactions start on January 1 2024. Blossom does not receive title to the properties, either during the lease term or at the end of it. The yearly rental for each of the leases is paid at the beginning of each year. Blossom Enterprises prepares its financial statements using ASPE. Lease term Estimated economic life Yearly rental payment Fair market value of leased asset Present value of lease rental payments Interest rate Manufacturing Equipment 5 years 15 years $12,000 $84,000 $54,180 3.5% Office Equipment Vehicles 6 years 3 years 7 years 6 years $12,840 $3,330 $72,600 $15,000 $67,308 $8,580 4% 8%

Three different lease transactions are presented below for Blossom Enterprises. Assume that all lease transactions start on January 1 2024. Blossom does not receive title to the properties, either during the lease term or at the end of it. The yearly rental for each of the leases is paid at the beginning of each year. Blossom Enterprises prepares its financial statements using ASPE. Lease term Estimated economic life Yearly rental payment Fair market value of leased asset Present value of lease rental payments Interest rate Manufacturing Equipment 5 years 15 years $12,000 $84,000 $54,180 3.5% Office Equipment Vehicles 6 years 3 years 7 years 6 years $12,840 $3,330 $72,600 $15,000 $67,308 $8,580 4% 8%

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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WHAT IS THE INCREASE IN LEASE LIABILITY?