Record the transactions in the first year

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Question - The Black Ltd. has serious financing issues. The management decided to sign a contract with the Green Ltd. with the following conditions: Black sells his machine for the Green on the 1st of January for 9 000 UNITs. The historical cost of the machines is 7 000 UNITs, the accumulated depreciation is 1 000 UNITs. Black rents the machines immediately form the Green for a period of 6 years. At the end of the contract Green is going to dismantle and transfer the machines. Until then Black pays all maintenance cost and tax expenses. Black pays 2 045 UNITs annual rental fee (the first immediately when the contract is signed). The implicit interest rate of the transaction is 8%. Record the above transactions in the first year.

Reference no: EM132950801

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