LessE Inc. leases a bulldozer from LessO Inc on Jan I", for four yeara between Jan I", and Dec
LessOs bulldozer has a book value of $ on Jan I"
LessE agrees to make four equal payments to LessO on the following days: Jan ; Dec ; Dec ; and Dec
The useful life of the bulldozer is four years at the end of which the residual value is
LessEs borrowing rate for similar transactions is
Let's assume this is a salestype lease without profit for the lessor. That is the present value of the lessee's payments equal the book value less the present value of any residual value returned to the lessor.
Record journal entries for both the lessor and the lessee.
