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On 1/1//2015, XYZ leases a machine from Super LeaseCo for four years. At the end of...

On 1/1//2015, XYZ leases a machine from Super LeaseCo for four years. At the end of the lease term, title passes to XYZ. Payments of $4,000 are made at the BEGINNING of each year 1/1/2015, 12/31/15, 12/31/16, AND 12/31/17). The machine has a useful life of 6 years, with no salvage value. XYZ uses straight-line amortization. Lessee interest rates is 6%. Fair value of machine is $14,692 which is the price that Super LeaseCo. paid for the machine. Assumption 1 - Record all required entries for XYZ for 2015-2020. Assumption 2 - Assume that the lease is changed so that XYZ must purchase the machine at the end of four years for $400, which is considered a bargain purchase option. The new annual lease payment is $3,914. Record all required entries for XYZ for 2015-2020.

Note: Assume Lease Test 5 is satisfied

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Assumption 2:

ekkarill92 answered 1 year ago
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