KateCo leased a warehouse from Big Dave Industries on July 1, 2013. The present value of the lease payments discounted at 10% was $160,000. Ten annual lease payments of $24,000 are due at the beginning of each fiscal year beginning July 1, 2013. Big Dave had constructed the equipment recently for $132,000 and its retail fair value was $200,000.
Required:
Following the guidance of the new ASU, prepare the two journal entries to record the lease by Big Dave at its commencement.

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The Answer of KateCo leased a warehouse from Big Dave Industries on July 1, 2013. The present value of the lease payments discounted at 10% was $160,000. Ten annual lease payments of $24,000 are due at the beginning of each fiscal year beginning July 1, 2013. Big Dave had constructed the equipment recently for $132,000 and its retail fair value was $200,000.
Required:
Following the guidance of the new ASU, prepare the two journal entries to record the lease by Big Dave at its commencement.

KateCo Leased a Warehouse from Big Dave Industries on July