Prepare appropriate entries for both IGA and Elf

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Question - Elf Leasing purchased a machine for $500,000 and leased it to IGA, Inc. on January 1, 2021.

Lease description:

Quarterly rental payments $32,629 at beginning of each period

Lease term 5 years (20 quarters)

No residual value; no BPO

Economic life of machine 5 years

Implicit interest rate and lessee's incremental borrowing rate 12%

Fair value of asset $500,000

Required - Prepare appropriate entries for both IGA and Elf Leasing from the beginning of the lease through the second rental payment on April 1, 2021. Amortization is recorded at the end of each fiscal year (December 31). Round your answers to the nearest whole dollar amounts.

Reference no: EM132502902

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