Nickle leased equipment to Back Company on July 1, 2013. The present value of the lease payments discounted at 10% was $120,000. Ten lease payments of $18,000 are due at the beginning of each fiscal year beginning July 1, 2013. Nickle had constructed the equipment recently for $99,000 and its retail fair value was $150,000.
Required:
Following the guidance of the new ASU, prepare the journal entries to record the lease by Nickle (lessor) at its commencement and at December 31, 2013.
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