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Record the initial journal entry at commencement of lease

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Reference no: EM132862106

Problem - Niko Ltd. signed a lease for a five-year term that requires yearly, beginning-of-year payments of $104,000 including maintenance. Based on allocating the lease payment on relative stand-alone prices, the lease component is $94,400 and the non-lease component for maintenance is $9,600. Niko has a residual guaranteed value of $26,500 at the end of the lease term. Niko's IBR is 10%.

Required -

1. Calculate the ROU asset.

2. Record the initial journal entry at commencement of the lease.

3. How much will Niko record as an asset if the residual value is unguaranteed?

Reference no: EM132862106

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