On January 1, 2018, Kuhn Corporation leased a plane from Bell Company for an eight-year period expiring January 1, 2026. Equal annual payments of $450,000 are due on January 1 of each year, beginning with January 1, 2018. The lease is properly classified as a finance lease on Kuhn’s books. The present value at January 1, 2018 of the eight lease payments over the lease term discounted at 10% is $2,640,789. The lease has a guaranteed residual value of $50,000, however the lessee expects the residual value to be only $25,000. Assuming the first payment is made on time, the amount that should be reported by Kuhn Corporation as the lease liability on its December 31, 2018 balance sheet is...
On January 1, 2018, Kuhn Corporation leased a plane from Bell Company for an eight-year period expiring January 1, 2026. Equal annual payments of $450,000 are due on January 1 of each year, beginning with January 1, 2018. The lease is properly classified as a finance lease on Kuhn’s books. The present value at January 1, 2018 of the eight lease payments over the lease term discounted at 10% is $2,640,789. The lease has a guaranteed residual value of $50,000, however the lessee expects the residual value to be only $25,000. Assuming the first payment is made on time, the amount that should be reported by Kuhn Corporation as the lease liability on its December 31, 2018 balance sheet is...
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 5RE: Use the information in RE20-3. Prepare the journal entries that Garvey Company would make in the...
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On January 1, 2018, Kuhn Corporation leased a plane from Bell Company for an eight-year period expiring January 1, 2026. Equal annual payments of $450,000 are due on January 1 of each year, beginning with January 1, 2018. The lease is properly classified as a finance lease on Kuhn’s books. The present value at January 1, 2018 of the eight lease payments over the lease term discounted at 10% is $2,640,789. The lease has a guaranteed residual value of $50,000, however the lessee expects the residual value to be only $25,000. Assuming the first payment is made on time, the amount that should be reported by Kuhn Corporation as the lease liability on its December 31, 2018
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