Reference no: EM132697849
Neely BBQ leased equipment from Smoke Industries on January 1, 2021. Smoke Industries had manufactured the equipment at a cost of $810,000.
Other information:
Lease term 4 years
Annual payments $360,000 beginning Jan. 1, 2021, and at Dec. 31, 2021, 2022, and 2023
Life of asset 4 years
Rate the lessor charges 8%
Problem 1: Prepare the appropriate entries for Neely BBQ (Lessee) on January 1, 2021, and December 31, 2021. Show your calculations and round them to the nearest whole dollar.
Problem 2: Prepare the appropriate entries for Smoke Industries (Lessor) on January 1, 2021, and December 31, 2021. Assume that control is transferred to the lessee. Show your calculations and round the amounts to the nearest whole dollar.
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