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Unformatted text preview: In-Class Activity #3 (30 points)List the two members of today’s activity__________________________________________________________________On January 1, 2007, Burke Corporation signed a 7-year noncancelable lease for a machine. The terms of the lease called for Burke to make annual payments of $12,000 at the beginning of each year, starting January 1, 2007. The machine has an estimated useful life of 8 years and zero residual value at the end of the lease. The machine reverts back to the lessor at the end of the lease term. Burke uses the straight-line method of depreciation for all of its plant assets. Burke’s incremental borrowing rate is 10%, and the lessor’s implicit rate is unknown.Compute the present value of the minimum lease payments by the lessee. (10 points)64,263=12000*5.35526Prepare any journal entries necessary on January 1, 2007. (10 points)Leased Asset 64,263Cash12,000Lease Liability52,263Prepare any journal entries necessary on December 31, 2007 and January 1, 2008. (10 points)Prepare any journal entries necessary on December 31, 2007 and January 1, 2008....
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- Fall '08