2. ConAir, Inc. acquired a second commuter plane in a capital lease transaction. The terms of the lease require ConAir to make 10 payments of $1 million at the END of each year. ConAir’s usual borrowing rate is 7%. Conair uses straight line depreciation and the plane will have a zero residual value at the end of 10 years. Show the journal entries for the following:
(a) The initial acquisition of the plane.
(b) The interest expense and lease payment for year 6.
(c) Depreciation expense for year 3.
ConAir Inc Details Annual lease payments 1,000,000 PV annuity factor @7% for 10 years = 7.0236 So PV of Annual Lease... View the full answer