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Prepare necessary journal entries for the entire lease term

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Reference no: EM133148279

Question - On January 1, 2019, the company leased a machinery to another entity with the following details:

Cost of machinery 3,449,600

Annual rental payable at the beginning of the year 800,000

Residual value 500,000

Useful life and lease term 5 years

Implicit interest rate 8%

The lease provides for a transfer of title to the lessee at the end of the lease term.

Required -

a. Compute the gross investment, net investment, and unearned interest income.

b. Prepare the table of amortization.

c. Prepare necessary journal entries for the entire lease term and the return.

Reference no: EM133148279

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