Make journal entries on the lessee books

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Question - Lee Ltd. recently signed a lease for equipment from Photon Inc. The lease term is five years and requires equal rental payments of $32,000 at the beginning of each year. The equipment has a fair value at the lease's inception of $140,000, an estimated useful life of eight years, and no residual value. Lee pays all executory costs directly to third parties. Photon set the annual rental to earn a rate of return of 8%, and this fact is known to Lee. The lease does not transfer title or contain a BPO.

- Make a lease amortization schedule for the lease obligation for the five-year term of the lease. 

- Make journal entries on the lessee's books related to the lease for years 2020 to 2021. Assume year end is December 31.

Reference no: EM132884403

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