Hoof & Tail Ltd enters into a non-cancellable lease agreement with Equine Industries to lease some equipment under the following conditions: $$\begin{array} { | l | r | l | }
\hline \text { Duration of the lease } & 9 \text { years } & \
\hline \text { Life of leased asset } & 11 \text { years } & \
\hline \text { Unguaranteed residual } & \$ 6,000 & \
\hline \text { Lease payment } & \$ 7,000 & \text { at lease inception } \
\hline \text { Lease payments (in arrears) } & \$ 5,000 & \text { per year (9 payments) } \
\hline
\end{array}$$ The interest rate implicit in the lease is 11% and the fair value of the asset at the inception of the lease is $37 031.What are the journal entries to record the lease,the payment at lease inception and the first lease payment in the books of the lessee (rounded to the nearest dollar)?

Question

Hoof & Tail Ltd enters into a non-cancellable lease agreement with Equine Industries to lease some equipment under the following conditions: $$\begin{array} { | l | r | l | } 
\hline \text { Duration of the lease } & 9 \text { years } & \
\hline \text { Life of leased asset } & 11 \text { years } & \
\hline \text { Unguaranteed residual } & \$ 6,000 & \
\hline \text { Lease payment } & \$ 7,000 & \text { at lease inception } \
\hline \text { Lease payments (in arrears) } & \$ 5,000 & \text { per year (9 payments) } \
\hline
\end{array}$$ The interest rate implicit in the lease is 11% and the fair value of the asset at the inception of the lease is $37 031.What are the journal entries to record the lease,the payment at lease inception and the first lease payment in the books of the lessee (rounded to the nearest dollar)?

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The Answer of Hoof & Tail Ltd enters into a non-cancellable lease agreement with Equine Industries to lease some equipment under the following conditions: $$\begin{array} { | l | r | l | } 
\hline \text { Duration of the lease } & 9 \text { years } & \
\hline \text { Life of leased asset } & 11 \text { years } & \
\hline \text { Unguaranteed residual } & \$ 6,000 & \
\hline \text { Lease payment } & \$ 7,000 & \text { at lease inception } \
\hline \text { Lease payments (in arrears) } & \$ 5,000 & \text { per year (9 payments) } \
\hline
\end{array}$$ The interest rate implicit in the lease is 11% and the fair value of the asset at the inception of the lease is $37 031.What are the journal entries to record the lease,the payment at lease inception and the first lease payment in the books of the lessee (rounded to the nearest dollar)?

Hoof & Tail Ltd Enters into a Non-Cancellable Lease Agreement