Solution-Prepare the journal entries for the lessee for

Prepare the journal entries for the lessee for first year

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Reference no: EM132834195

Question - Valentina Ltd, on 1 July 2020, sells a truck having a carrying amount on its books of $100 000 to George Ltd for $140 000 and immediately leases the truck back under the following conditions:

The term of the lease is 10 years, non-cancellable, and requires lease payments of $30 000 at the end of each year.

The estimated economic life of the tractor is 10 years.

There is no residual value.

Lessee pays $7216 executory cost (these costs are included in the lease payments).

The implicit rate of interest in the lease is 10 per cent.

Required -

(a) Prove the interest rate implicit in the lease is 10 per cent.

(b) Prepare the journal entries for the lessee for the first year of the lease.

Reference no: EM132834195

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Prepare the journal entries for the lessee for first year

Reference no: EM132834195

Reference no: EM132834195

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