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Prepare IBM December entry to record lease transaction

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Reference no: EM132880095

Question - Assume that IBM leased equipment that was carried at a cost of $66,000 to Blossom Company. The term of the lease is 6 years December 31, 2019, with equal rental payments of $20,038 beginning December 31, 2019. The fair value of the equipment at commencement of the lease is $95,998. The equipment has a useful life of 6 years with no salvage value. The lease has an implicit interest rate of 10%, no bargain purchase option, and no transfer of title. Collectibility of lease payments for IBM is probable. Assume the sales-type lease was recorded at a present value of $95,998. Prepare IBM's December 31, 2020, entry to record the lease transaction with Blossom Company.

Reference no: EM132880095

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