Deborah Limited has entered into an agreement to lease manufacturing equipment. The following terms are included in the lease: The lease is entered into on January 1, 2020. The equipment can be purchased for $125,000. The company uses straight-line depreciation.
Instructions
a) Prepare the journal entry for 2020 to recognize the lease.
b) Record the entry for the first lease payment on January 31, 2020. What it is the value of the outstanding lease liability on January 31, 2020?
c) What is the carrying value of the equipment on January 31, 2020?

Question

Deborah Limited has entered into an agreement to lease manufacturing equipment. The following terms are included in the lease:  The lease is entered into on January 1, 2020. The equipment can be purchased for $125,000. The company uses straight-line depreciation.
Instructions 
a) Prepare the journal entry for 2020 to recognize the lease.
b) Record the entry for the first lease payment on January 31, 2020. What it is the value of the outstanding lease liability on January 31, 2020?
c) What is the carrying value of the equipment on January 31, 2020?

Quizplus · Accepted Answer

The Answer of Deborah Limited has entered into an agreement to lease manufacturing equipment. The following terms are included in the lease:  The lease is entered into on January 1, 2020. The equipment can be purchased for $125,000. The company uses straight-line depreciation.
Instructions 
a) Prepare the journal entry for 2020 to recognize the lease.
b) Record the entry for the first lease payment on January 31, 2020. What it is the value of the outstanding lease liability on January 31, 2020?
c) What is the carrying value of the equipment on January 31, 2020?

Deborah Limited Has Entered into an Agreement to Lease Manufacturing