Record the journal entry for any operating leases

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Reference no: EM133034125

Question - Below are three lease transactions for VNN Airways in 20XX as the Lessee. All leases start on 1/1/XX. Lessors

 

BJN Leasing

CMN Leasing

BVC Leasing

Type of property

787 Aircraft

727 Aircraft

L-1011 Aircraft

Yearly rental

$7,445,064

$5,449,423

$2,851,861

Lease term

15 years

15 years

20 years

Estimated economic life

25 years

25 years

25 years

Fair market value of leased asset

$69,300,000

$54,000,000

$32,000,000

Present value of the rental payments

$63,000,000

$46,000,000

$28,000,000

Purchase price at end of lease

$15,000,000

$9,000,000

$7,000,000

Required -

1. Identify the three above leases as either operating or capital leases, and explain your answer.

2. Record the initial journal entry for any of the above that are capital leases.

3. Record the journal entry for any of the above that are operating leases.

Reference no: EM133034125

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