Prepare the appropriate entries for the lessor

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Reference no: EM13880357

Terms of a lease agreement and related facts were:
a. Leased asset has a retail cash selling price of $100,000. Its useful life is six years.
b. Annual lease payments at the beginning of each year are $20,873, beginning January 1. The lease term is six years.
c. Lessor's interest rate when calculating annual lease payments was 9%.
d. Costs of negotiating and consummating the completed lease transaction incurred by the lessor are $2,062.

Required:
Prepare the appropriate entries for the lessor to record the lease, the initial payment at its commencement, and at the December 31 fiscal year-end under each of the following two independent assumptions:
1. The lessor recently paid $100,000 to acquire the asset.
2. The lessor recently paid $85,000 to acquire the asset.

Reference no: EM13880357

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