a)A corporation entered into a 3-year non cancellable lease of equipment on December 31 of year 0 with rental payments of $43,000 on December 31 of year 0, year 1, and year 2; the rental payments include $3,000 for property taxes; the incremental borrowing rate is 8%; the lease contains a guaranteed residual value of the equipment of $10,000 at the end of the lease; the equipment has an estimated useful life of 4 years; the equipment has an estimated salvage value of $0 at the end of 4 years
Lease Liability = 40,000 x 2.78326 + 10,000 x .79383 = 119,269
Required:
show all the relevant journal entries for the above in the books of leasing Ltd for 6 years. (10 marks)
c) A corporation entered into a 3-year non cancellable lease of equipment on December 31 of year 0 with rental payments of $43,000 on December 31 of year 0, year 1, and year 2; the rental payments include $3,000 for property taxes; the incremental borrowing rate is 8%; the lease contains an unguaranteed residual value of the equipment of $10,000 at the end of the lease; the equipment has an estimated useful life of 4 years; the equipment has an estimated salvage value of $0 at the end of 4 years
Lease Liability = 40,000 x 2.78326 = 111,331
Required:
show all the relevant journal entries for the above in the books of leasing Ltd for 6 years