The Following Information Relates to a Lease Contract: Lease Inception

question 126

Essay

The following information relates to a lease contract: Lease inception = 1-1-x1
Market value and book value (to lessor)of New equipment under lease = $10,000 Interest rate used by both lessee and lessor The lease allows the lessee to purchase the asset for $200 on 1-1-x4.
There are no uncertainties with respect to collectability of lease payments, or performance by lessor.
(a)Determine the annual lease payment
(b)Classify the lease for the lessee
(c)Record the 2014 entries

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Definitions:

Regularity

The quality or state of being uniform, consistent, or orderly in pattern or arrangements.

Deaf Children

Children who have a severe hearing impairment, which significantly affects their ability to communicate and interact with their environment.

Infant-Directed Speech

A form of speech characterized by a higher pitch, slower tempo, and exaggerated intonations, used by adults when talking to babies to aid in language development.

Cross-Culturally

Involving, pertaining to, or extending across two or more cultures.