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Prepare journal entries to account for the lease for jrl

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Reference no: EM132742840

On 31 December JRL (Company name) entered into a lease to rent construction equipment that had the following terms:

  1. Borrowing rate 8%, prime rate is 6% and implicit known rate by JRL is 9%
  2. The equipments fair value on 31 December 20x6 is $250,000 with a useful life of eight years and a residual value guarantee of $50,000
  3. The lease term is for a period of 5 years with annual payments at the beginning of the year
  4. The asset reverts back to the lessor at the end of the lease term and the expected payment under the guarantee is $20,000

Problem 1: Prepare journal entries for the 20X6 and 20X7 to account for the lease for JRL

Reference no: EM132742840

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