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Lessee entries with bargain purchase option

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Reference no: EM132347812

(Lessee Entries with Bargain Purchase Option) The following facts pertain to a non-cancelable lease agreement between Mooney Leasing and Choi Group, a lessee (amounts in thousands).

Commencement dateMay 1, 2019

Annual lease payment due at the beginning of each year, beginning with May 1, 2019¥20,471.94

Bargain purchase option price at end of lease term¥ 4,000.00

Lease term5 years

Economic life of leased equipment10 years

Lessor's cost¥65,000.00

Fair value of asset at May 1, 2019¥91,000.00

Lessor's implicit rate8%

Lessee's incremental borrowing rate8%

The collectibility of the lease payments by Mooney is probable.

Instructions

(Round all numbers to the nearest yen)

Reference no: EM132347812

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