Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. crane corporation enters into a 5-year lease of eq

Crane Corporation enters into a 5-year lease of equipment on December 31, 2016, which requires...

90.2K

Verified Solution

Question

Accounting

Crane Corporation enters into a 5-year lease of equipment on December 31, 2016, which requires 5 annual payments of $43,200 each, beginning December 31, 2016. In addition, Crane guarantees the lessor a residual value of $18,000 at the end of the lease. However, Crane believes it is probable that the expected residual value at the end of the lease term will be $8,000. The equipment has a useful life of 5 years. Assume that for Lost Ark Company, the lessor, collectibility of lease payments is probable and the carrying amount of the equipment is $150,000. Prepare Lost Arks 2016 and 2017 journal entries, assuming the implicit rate of the lease is 9% and this is known to Crane. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places e.g. 5,275.)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students