What the journal entry at the inception of the lease

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Reference no: EM132800418

Question - On October 31, 20X5, Walsh Corp. (WC) signed a contract to rent an excavator for a 12-month period, details of which are set out below:

Contract term: 12 months

Implicit rate in lease: unknown by WC

WC's incremental borrowing rate: 0.4% per month

Payments: $4,000 per month first due at the commencement date

Useful life: 10 years

Residual value end of lease term: $150,000 (not guaranteed)

Residual value end of useful life: $8,000

Transfer of title: No

WC's policy is to adopt the recognition exemption to expense short-term leases whenever possible. What the journal entry at the inception of the lease would include which of the following?

a. $1.47

b. $1.57

c. $1.45

d. $1.30

Reference no: EM132800418

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