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Turnip Ltd. (Turnip), a private company reporting under ASPE, entered into the following transactions: 1....

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Accounting

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Turnip Ltd. (Turnip), a private company reporting under ASPE, entered into the following transactions: 1. On April 1, 2021, Axis Automotive leased a car, with a useful life of 8 years, to Turnip for two years. Terms of the lease call for monthly payments of $450. The fair value of the car was $60,000. 2. On April 1, 2021, Turnip entered into an agreement to lease 15 tractors with a fair market value of $280,000 from Grave Corporation. The terms of the lease agreement require an initial payment of $70,000 and then four annual rental payments of $50,000 beginning on December 31, 2021. The present value of the four rental payments is $195,368. Instructions a) Identify each lease as either operating or capital and explain why it is that type of lease. b) Prepare the appropriate journal entries to be made by Turnip on January 1 related to the lease transactions. Part 1: Q# Type of Lease Why? 1. 2. Part 2 - Lease #1 - 1 Date Accounts Debit Credit Part 2 - Lease #1 Date Accounts Debit Credit I Part 2 - Lease #2 Date Accounts Debit Credit

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