Blue Corporation Enters Into A 6-year Lease Of Equipment On December 31, 2016, Which Requires 6 Annual Payments Of $42,200 Each, Beginning December 31, 2016. In Addition, Blue Guarantees The Lessor A Residual Value Of $19,500 At The End Of The Lease. However, Blue Believes It Is Probable That The Expected Residual Value At The End Of The Lease Term Will Be $9,500. The Equipment Has A Useful Life Of 6 Years. Assume That For Lost Ark Company, The Lessor, Collectibility Of Lease Payments Is Probable And The Carrying Amount Of The Equipment Is $160,000. Prepare Lost Ark’s 2016 And 2017 Journal Entries, Assuming The Implicit Rate Of The Lease Is 10% And This Is Known To Blue

Blue Corporation enters into a 6-year lease of equipment on December 31, 2016, which requires 6 annual payments of $42,200 each, beginning December 31, 2016. In addition, Blue guarantees the lessor a residual value of $19,500 at the end of the lease. However, Blue believes it is probable that the expected residual value at the end of the lease term will be $9,500. The equipment has a useful life of 6 years. Assume that for Lost Ark Company, the lessor, collectibility of lease payments is probable and the carrying amount of the equipment is $160,000. Prepare Lost Ark’s 2016 and 2017 journal entries, assuming the implicit rate of the lease is 10% and this is known to Blue

- November 14, 2022 - Edwin Tunner

Blue Corporation enters into a 6-year lease of equipment on December 31, 2016, which requires 6 annual payments of $42,200 each, beginning December 31, 2016. In addition, Blue guarantees the lessor a residual value of $19,500 at the end of the lease. However, Blue believes it is probable that the expected residual value at the end of the lease term will be $9,500. The equipment has a useful life of 6 years. Assume that for Lost Ark Company, the lessor, collectibility of lease payments is probable and the carrying amount of the equipment is $160,000.

Prepare Lost Ark’s 2016 and 2017 journal entries, assuming the implicit rate of the lease is 10% and this is known to Blue

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