Prepare appropriate journal entries for ryder leasing

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Reference no: EM131928641

GE leased equipment from Ryder Leasing on January 1, 2016. Ryder manufactured the equipment at a cost of $90,000.

Other information:

Lease term 3 years

Annual payments $40,000 on January 1 each year

Life of assest 3 years

Implicit interest rate 8%

Incremental rate 8%

PV, annunity due, 3 period 8% 2.7833

PV, ordinary annunity, 3 periods, 8% 2.5771

There is no expected residual value.

1. What type of lease is this? Be specific, and explain.

2. Prepare appropriate journal entries for Ryder Leasing for 2016 and 2017. Assume a December 31 year-end.

Reference no: EM131928641

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