Make all the necessary journal entries for Falls Company

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Question - Cheyenne Corporation leases equipment from Falls Company on January 1, 2020. The lease agreement does not transfer ownership, contain a bargain purchase option, and is not a specialized asset. It covers 3 years of the equipment's 8-year useful life, and the present value of the lease payments is less than 90% of the fair value of the asset leased. The annual lease payment is $34,000 at the beginning of each year, and Cheyenne's incremental borrowing rate is 4%, which is the same as the lessor's implicit rate.

Required - Make all the necessary journal entries for Falls Company (the lessor) for 2020, assuming the equipment is carried at a cost of $200,000.

Reference no: EM132702429

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