Financial accounting 16th Edition by Jan Williams,Susan Haka,Mark Bettner ,Joseph Carcello

تمرين 30

Accounting for Leases
On July 1, Pine Region Dairy leased equipment from Farm America for a period ofthree years.The lease calls for monthly payments of $2,500 payable in advance onthefirst day of each month,beginning July 1.
Prepare the journal entry needed torecord this lease in the accounting records of Pine Region Dairy onJuly 1under each of the following independent assumptions:
a.he lease represents a simple rental arrangement.
b.t the end of three years, title to this equipment will be transferred to Pine Region Dairy at no.additional cost.he present value of the 36monthly lease payments is $76,021, ofwhich $2,500 is paid in cash onJuly 1.one of the initial $2,500 is allocated tointerest expense.
c.hy is situation a, the operating lease, sometimes called off-balance sheet financing '
d.ould it be acceptable for a company to account for a capital lease as anoperating lease to report rent expense rather than a long-term liability