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Braun company signs a five year capital lease

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Reference no: EM13900908

Braun Company signs a five year capital lease with Verdi Company for office equipment. The annual lease payment is $ 20,000, and the interest rate is 10%. 

Required: 

1. Compute the present value of Braun's lease payments. 

2. Prepare the journal entry to record Braun's capital lease at its inception. 

3. Complete a lease payment schedule for the five years of the lease with the following headings. Assume that the beginning balance of the lease liability (present value of lease payments) is $ 75,816.

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4. Use straight line depreciation and prepare the journal entry to depreciate the leased asset at the end of year 1. Assume zero salvage value and a five-year life for the officeequipment.

Reference no: EM13900908

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