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Assume that IBM leased equipment that was carried at a cost of $174,000 to Sandhill...

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Accounting

Assume that IBM leased equipment that was carried at a cost of $174,000 to Sandhill Company. The term of the lease is 5 years beginning December 31,2024, with equal rental payments of $30,400 beginning December 31,2024. The fair value of the equipment at commencement of the lease is $131,089. The equipment has a useful life of 5 years with no salvage value. The lease has an implicit interest rate of 8%, no bargain purchase option, and no transfer of title. Collectibility of lease payments for IBM is probable. Prepare IBM's December 31,2024, journal entries at commencement of the lease.

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