135 south bend corporation purchased equipment in december 2015 for 150 000 south be 4313610

135 south bend corporation purchased equipment in december 2015 for 150 000 south be 4313610

135.South Bend Corporation purchased equipment in December 2015 for $150,000. South Bend leased the equipment to the Kansas Company on January 1, 2016. Lease payments of $43,000 are to be made at the end of each year for six years. The present value of the minimum lease payments at 14% interest is $167,212.72 at the time of the lease. At the end of the lease term, ownership of the equipment will be transferred to Kansas. The collectibility of the lease payments is reasonably assured, and there are no important uncertainties surrounding the amount of unreimbursable costs yet to be incurred by the lessor.

Required:

a.

Classify the lease from the South Bend Corporation's standpoint.

b.

Prepare the 2016 journal entries regarding the lease for the South Bend Corporation.

"Get 15% discount on your first 3 orders with us"
Use the following coupon
"FIRST15"

Order Now

Related Posts