Reference no: EM133053141

Question - On January 1, 2020, Jay and Partner Company entered into a term Lease for three years irrevocable on an asset, with an estimated useful life of 3 years. The three Lease payments each amounted to Rp 213,128,502,00 due on January 1^st 2020, 2021, and 2022. The fair market value of the assets at the commencement of the lease is IDR 473,500,000.00 which is also the carrying amount (cost) in the books of the Lessor. This lease does not load renewal or purchase option, and the asset returns to the lessor at the end of the three-year period. Lessee's incremental borrowing rate is 11.5%. Jay . Company and Partner depreciates its assets using the straight-line method for purposes of bookkeeping, the residual value of the assets is estimated at Rp. 0.00. Accounting year ends December 31 for both sides. Lessor's implicit interest rate (targeted rate of return), i.e. The interest rate that equates the present value of payments with the market value of the asset is 11.5%. Prepare Lessee's journal entry for the first year?