Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. larkspur company leased equipment from costner com

Larkspur Company leased equipment from Costner Company, beginning on December 31, 2016. The lease term...

70.2K

Verified Solution

Question

Accounting

Larkspur Company leased equipment from Costner Company, beginning on December 31, 2016. The lease term is 4 years and requires equal rental payments of $75,500 at the beginning of each year of the lease, starting on the commencement date (December 31, 2016). The equipment has a fair value at the commencement date of the lease of $260,000, an estimated useful life of 4 years, and no estimated residual value. The appropriate interest rate is 11%.

Prepare Larkspurs 2016 and 2017 journal entries, assuming Larkspur depreciates similar equipment it owns on a straight-line basis. (Credit account titles are automatically indented when the 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.)

image

Account Titles and Explanation Debit Credit Date 12/31/16 To record lease liability) 12/31/16 (To record lease payment) 12/31/17 (To record interest expense) 12/31/17 To record amortization of the right-of-use asset)

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