Pina Corporation leases equipment from Falls Company on January 1, 2017. The lease agreement does...
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Pina Corporation leases equipment from Falls Company on January 1, 2017. The lease agreement does not transfer ownership, contain a bargain purchase option, and is not a specialized asset. It covers 3 years of the equipments 8-year useful life, and the present value of the lease payments is less than 90% of the fair value of the asset leased. The annual lease payment is $32,000 at the beginning of each year, and Kingstons incremental borrowing rate is 9%, which is the same as the lessors implicit rate. Prepare all the necessary journal entries for Falls Company (the lessor) for 2017, assuming the equipment is carried at a cost of $176,000. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
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