Manufacturers Southern leased high-tech electronic equipment from International Machines on January 1, 2018. International Machines...
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Manufacturers Southern leased high-tech electronic equipment from International Machines on January 1, 2018. International Machines manufactured the equipment at a cost of $101,000. Manufacturers Southern's fiscal year ends December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Related Information: Lease term 2 years (8 quarterly periods) Quarterly rental payments $18,000 at the beginning of each period Economic life of asset 2 years Fair value of asset $132,289 Implicit interest rate 10% Required: 1. Show how International Machines determined the $18,000 quarterly lease payments. 2. Prepare appropriate entries for International Machines to record the lease at its beginning, January 1, 2018, and the second lease payment on April 1, 2018.
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