Solution-Prepare the appropriate entries for Maywood

Prepare the appropriate entries for Maywood

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Reference no: EM132684696

Question - On January 1, 2021, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a five-year period ending December 31, 2024, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $418,922 and has an expected economic life of six years. Aqua expects the residual value at December 31, 2024, to be $56,000. Negotiations led to Maywood guaranteeing a $79,000 residual value.

Equal payments under the lease are $112,000 and are due on December 31 of each year with the first payment being made on December 31, 2021. Maywood is aware that Aqua used a 7% interest rate when calculating lease payments.

Required - Prepare the appropriate entries for Maywood on January 1, 2021 and December 31, 2021, related to the lease.

1. Record the beginning of the lease for Maywood.

2. Record the amortization of the right- of-use.

3. Record the lease payment.

Reference no: EM132684696

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Prepare the appropriate entries for Maywood

Reference no: EM132684696

Reference no: EM132684696

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