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Prepare the required entries made by blossom corp

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Question: Blossom Corp. agreed to lease property from Waterway Corp. effective January 1, 2020, for an annual payment of $24,201, beginning January 1, 2020. The property is made up of land with a fair value of $118,000 and a two-storey office building with a fair value of $172,000 and a useful life of 25 years with no residual value. The implicit interest rate is 7.5%, the lease term is 25 years, and title to the property will not be transferred to Blossom by the end of the lease term. Assume that there is also no bargain purchase option, but that the lease does meet other criteria to qualify as a capital lease. Both Blossom and Waterway use ASPE.

Prepare the required entries made by Blossom Corp. on January 1, 2020, and at its year end of December 31, 2020.

Reference no: EM132746687

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