Solution-Record the transactions in the first year

Record the transactions in the first year

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Reference no: EM132968586

Question - The company purchase a special machine for the production based on a lease contract. The contract last for 4 years, the useful lifetime of the machine is 5 years. The annual fee is 41,000, plus the company has an initial 20,500 payment liability at the beginning of the first year. At the end of the contract period there is an option to buy the machine at a discounted price. The management is committed to use this option. The fair value of the transaction is 165,884, the market interest rate is 5%.

Required - Record the above transactions in the first year. (Round to the nearest integer.)

1. Purchase: Dr CR: VALUE:

2. Initial payment: Dr CR: VALUE:

3. Depreciation: DR: CR: VALUE

4. Payment (interest): CR/DB VALUE:

5. Payment (principle): CR/DB VALUE:

6. Payment (cash): CR/DB VALUE:

7. Reclass.: Dr: CR: VALUE:

Reference no: EM132968586

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Record the transactions in the first year

Reference no: EM132968586

Reference no: EM132968586

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