We-Lease-All,Inc

question 20

Essay

We-Lease-All,Inc.leased a chroming machine to Fernando's Choppers.The lease qualifies as a direct financing lease and requires lease payments of $74,502 per year,payable in advance,over a ten-year period.There is no expected residual value.The fair market value of the packing machine is $430,000--the same amount paid by Choppers to purchase the asset.The lease term begins on January 1,2014.
Provide the journal entries required on Choppers' books to
(1)record the lease transaction and the first lease payment.
(2)recognize interest revenue at the end of the first year.Washington uses a calendar-year accounting period.(Round all computations to the nearest dollar.)

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Definitions:

Criterion-related Validity

The extent to which a measure is associated with an external criterion or outcome, assessing the test's predictive or concurrent accuracy.

Content Validity

The extent to which a test measures all aspects of the concept it intends to measure.

Criterion-related Reliability

A measure of how well a test predicts or correlates with a specific outcome or behavior, used to assess the validity of the test for specific purposes.

Construct Validity

The extent to which a test or instrument measures the theoretical concept or construct that it is intended to measure.