Nickle leased equipment to Back Company on July 1, 2018. Lease payments of $18,000 are due each year beginning July 1, 2018. The present value of the lease payments discounted at 10% was $120,000. The asset's useful life is 12 years.
Required:
1. Prepare the journal entries to record the lease by Nickle (lessor) at July 1, 2018, and at December 31, 2018, the end of its fiscal year. Assume that Nickle acquired this equipment for $120,000 on July 1, 2018 for the purpose of this lease and that control of the equipment was transferred to the lessee at the beginning of the lease.
2. Prepare the journal entries to record the lease by Nickle (lessor) at July 1, 2018, and at December 31, 2018, the end of its fiscal year. Assume that Nickle acquired this equipment for $180,000 on July 1, 2018 for the purpose of this lease and that that control of the equipment was not transferred to the lessee.

Question

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The Answer of Nickle leased equipment to Back Company on July 1, 2018. Lease payments of $18,000 are due each year beginning July 1, 2018. The present value of the lease payments discounted at 10% was $120,000. The asset's useful life is 12 years.
Required:
1. Prepare the journal entries to record the lease by Nickle (lessor) at July 1, 2018, and at December 31, 2018, the end of its fiscal year. Assume that Nickle acquired this equipment for $120,000 on July 1, 2018 for the purpose of this lease and that control of the equipment was transferred to the lessee at the beginning of the lease.
2. Prepare the journal entries to record the lease by Nickle (lessor) at July 1, 2018, and at December 31, 2018, the end of its fiscal year. Assume that Nickle acquired this equipment for $180,000 on July 1, 2018 for the purpose of this lease and that that control of the equipment was not transferred to the lessee.

Nickle Leased Equipment to Back Company on July 1, 2018