Fresco Ltd enters into a non-cancellable lease agreement with Meola Ltd to lease some equipment under the following conditions: $$\begin{array} { | l | r | l | }
\hline \text { Duration } & 20 \text { years } & \
\hline \text { Life of leased asset } & 25 \text { years } & \
\hline \text { Unguaranteed residual } & \$ 9,000 & \
\hline \text { Lease payment } & \$ 2,000 & \text { at inception } \
\hline \text { Lease payments (in arrears) } & \$ 8,500 & \text { per year (20 payments) } \
\hline
\end{array}$$ The interest rate implicit in the lease is 9% and the fair value of the asset at the inception of the lease is $81 199.What are the journal entries to record the lease payment at inception of the lease and the next two lease payments in the books of the lessee (rounded to the nearest dollar)?

Question

Fresco Ltd enters into a non-cancellable lease agreement with Meola Ltd to lease some equipment under the following conditions: $$\begin{array} { | l | r | l | } 
\hline \text { Duration } & 20 \text { years } & \
\hline \text { Life of leased asset } & 25 \text { years } & \
\hline \text { Unguaranteed residual } & \$ 9,000 & \
\hline \text { Lease payment } & \$ 2,000 & \text { at inception } \
\hline \text { Lease payments (in arrears) } & \$ 8,500 & \text { per year (20 payments) } \
\hline
\end{array}$$ The interest rate implicit in the lease is 9% and the fair value of the asset at the inception of the lease is $81 199.What are the journal entries to record the lease payment at inception of the lease and the next two lease payments in the books of the lessee (rounded to the nearest dollar)?

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The Answer of Fresco Ltd enters into a non-cancellable lease agreement with Meola Ltd to lease some equipment under the following conditions: $$\begin{array} { | l | r | l | } 
\hline \text { Duration } & 20 \text { years } & \
\hline \text { Life of leased asset } & 25 \text { years } & \
\hline \text { Unguaranteed residual } & \$ 9,000 & \
\hline \text { Lease payment } & \$ 2,000 & \text { at inception } \
\hline \text { Lease payments (in arrears) } & \$ 8,500 & \text { per year (20 payments) } \
\hline
\end{array}$$ The interest rate implicit in the lease is 9% and the fair value of the asset at the inception of the lease is $81 199.What are the journal entries to record the lease payment at inception of the lease and the next two lease payments in the books of the lessee (rounded to the nearest dollar)?

Fresco Ltd Enters into a Non-Cancellable Lease Agreement with Meola