Business, 25.10.2021 23:40 anglebaby559p0nxvi

ABC Corp. leased equipment from XYZ Corp. on January 1, 2021, with the first payment due on that date. The equipment was acquired by XYZ at a cost of $80,000 and has a $0 residual value. Depreciation is recorded at the end of each fiscal year (December 31) on a straight-line basis. Additional details: Semiannual lease payment: $16,000 at the beginning of each period (January 1 and July 1)
Lease term: 3 years (6 semiannual periods)
Useful life of asset: 3 years Fair value of asset: $87,229
Annual interest rate: 8%
Present value of lease payments: $87,229

The Journal entry recorded by ABC Corp. ot inception of the lease will include:

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ABC Corp. leased equipment from XYZ Corp. on January 1, 2021, with the first payment due on that dat...

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