Question
In: Accounting
On January 1, 2021 Big Lion Corporation leased equipment from Nittany Inc. for a 11-year period....
On January 1, 2021 Big Lion Corporation leased equipment from Nittany Inc. for a 11-year period. The annual lease payment is $12,000. The prevailing interest rate is 8%. The first payment is due on January 1, 2021. All payments thereafter are made on December 31st of each year beginning with December 31, 2021. Assume the lease is accounted for as an Operating Lease. Required:
1. What journal entry does Big Lion Corporation make on January 1, 2021 to record the lease?
2. What journal entry does Big Lion Corporation make on January 1, 2021 to record the first lease payment?
3. What is Big Lion’s recorded book value (i.e., balance sheet amount) for the leased asset on December 31, 2022?
Solutions
Expert Solution
TThis answer is as per IFRS-116. Earlier IAS-17 had different
treatment which is now invalid.
ekkarill92 answered 1 year agoRelated Solutions
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