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Prepare amortization table for lessee company for the lease

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Reference no: EM132788417

Lessee Company is a manufacturer of plastic toys. On Jan. 1, 2010, the company signed a contract to lease plastic extruding equipment from Lessor Company. The lease was for 5 years, commencing immediately on January 1, 2010. The annual lease payment was set at $19,000, and to be made at the beginning of each year.

  • Under the agreement, Lessee Company guaranteed that the leased equipment would be worth $8,000 when returned. The lessor's rate of return on the leasing arrangement was 8%, and this was known to the lessee.

Lessee Company had a year end of Dec. 31, and followed IFRS.

Required:

Problem (1) Prepare amortization table for Lessee Company for the lease

Problem (2) Prepare the all journal entries for the lessee in 2010 and 2011

Problem (3) Prepare the journal entries that Lessee Company would make when the equipment was returned at the end of the lease and it was worth $5,000.

Reference no: EM132788417

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