Prepare entries for falk to record the lease asset

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On January 1 of year 1, Falk Company signed a contract to lease space in a building for 3 years. The lease contract calls for annual (prepaid) rental payments of $94,000 on each January 1 throughout the life of the lease and for the lessee to pay for all additions and improvements to the leased property. Present value of the three lease payments is $261,600.

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Question 1. Assume the lease is accounted for as a finance lease. Prepare entries for Falk to record (a) the lease asset and obligation at January 1, Year 1, and (b) the $87,200 per year straight-line amortization at December 31 of Year 1, 2, and 3.

Reference no: EM132496443

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