Question
In: Accounting
Cullumber Corporation, which uses ASPE, enters into a 6-year lease of equipment on September 1, 2020,...
Cullumber Corporation, which uses ASPE, enters into a 6-year lease of equipment on September 1, 2020, that requires 6 annual payments of $38,000 each, beginning September 1, 2020. In addition, Cullumber guarantees the lessor a residual value of $27,000 at lease end. The equipment has a useful life of seven years.
Using (1) tables, (2) a financial calculator, or (3) Excel
functions, calculate the amount of the capital lease and prepare
Cullumber’s September 1, 2020 journal entry assuming an interest
rate of 12%. (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 0 for the amounts. Round factor values to 5 decimal places,
e.g. 1.25124 and final answers to 0 decimal places, e.g.
5,275.)
Solutions
ekkarill92 answered 1 year agoRelated Solutions
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lease agreement:
1.
The term of the noncancelable lease is 4 years, with
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July 1 of each year.
2.
The fair value of the equipment on July 1, 2021 is $3,020,000.
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Krause’s incremental borrowing rate is 10% and is aware of Daly’s
required rate of return. Krause uses the straight-line method to
amortize its assets. Daly is...
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