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e21-7 - equipment has an economic life of 8 years so by...

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Exercise 21-7 (a) (b) 10,000 x .53463=5346.40 150,000 - 5346.40 = 144653.60 144653.60/4.69590=30804.23 © Leased Equipment under capital lease 1/1/2007 Leases 141846 lease liability 141846 lease liability 30804.23 cash 30804.23 12/31/2007 Dep Expense 23641 Acc. Depre. 23641 Interest Exp. 133225 Interest Pay. 13325 (d) Lease Rec. 150,000 1/1/2007 COGS 114,654 Sales 114,654 Inventory 120,000 Cash 30,804.23 Lease Rec. 30804.23 12/31/2007 Interest Rec. 13,112 Interest Rev. 13,112 This is a sales type, non-cancelable lease. Because at the end of the 6 yea is terminated and the lessor retains the assets. The lease terms is 6 years,
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Unformatted text preview: equipment has an economic life of 8 years, so by divide those two numbers up with .75 which make the lease term 75% of the asset economic life. The retain the asset at the end of the six year term because the asset cost was since this is a noncancelable lease Flynn will have to pay out all 6 years of p at the end of the six years the Benson company will have obtain 150,000 fo that orginal cost 120,000. ars the lease and the s you’ll come e lessor will 120,000 and payment and or an asset...
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