Record journal entries for both blue and pink company

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problem 1: On January 1 year 1, Blue company rented a machine that had an estimated remaining useful life of 5 years, cost of $10,000 and accumulated depreciation of $3000 from pink company. The lease agreement was made for three years and lease payment starts on December 31 year 1 which amounts to $2000 per year. The lease is non-cancellable lease. At the end of the lease term, the fair value of the machine was found to be $5000.

Question 1: Assume a current fair market rate 8%. Record all the necessary journal entries for both blue and pink company

Reference no: EM132470562

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