Company A sells a machine to Company B for its fair value of $ 2,000,000...
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Accounting
Company A sells a machine to Company B for its fair value of $ 2,000,000 on January 1,2018
Company A immediately leases the machine back for 5 years
The useful life of the machine is 7 years
The implicit rate is 7% and the incremental borrowing rate is 6% (assume both rates are known to lessee)
The machine was recorded on Company A's books at$ 1,400,000
The residual value at the end of 5 years is expected to be $ 400,000 and is not guaranteed
Assuming the annual payments are at the beginning of the period are what is the lease payment Company B would charge Company A?
Using IFRS give the initial journal entries for Company B
Using ASPE give the initial journal entries for Company B
Using IFRS give the initial journal entries for Company A
Using ASPE give the initial journal entries for Company A
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