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Prepare pharoah corporation january journal entries

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Pharoah Corporation, which uses ASPE, leased equipment it had manufactured at a cost of $153,214 for Concord, the lessee. The equipment's regular selling price is $195,000. The term of the lease is 8 years, beginning January 1, 2020, with equal rental payments of $30,520 at the beginning of each year. Concord pays all executory costs directly to third parties. The equipment's fair value at the lease's inception is $195,000. The equipment has a useful life of seven years with no residual value. The lease has an implicit interest rate of 7%, no bargain purchase option, and no transfer of title. Collectibility is reasonably assured, with no additional costs to be incurred by Pharoah.

Problem 1: Prepare Pharoah Corporation's January 1, 2020 journal entries at the inception of the lease and the entry at December 31, 2020, to record interest.

Reference no: EM132695158

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