Berne Company lessor enters into a lease with Fox Company to lease equipment to Fox beginning January Year The lease terms, provisions, and related events are as follows:
The lease term is years. The lease is noncancelable and requires annual rental payments of $ to be made at the end of each year.
The equipment costs $ The equipment has an estimated life of years and an estimated residual value at the end of the lease term of zero.
Fox agrees to pay all executory costs directly to a third party.
The interest rate implicit in the lease is
The initial direct costs are insignificant and assumed to be zero.
The collectability of the rentals is reasonably assured.
Required:
Next Level Assuming that the lease is a salestype lease from Berne's point of view, calculate the selling price and assume that this is also the fair value.
Prepare a table summarizing the lease receipts and interest income earned by Berne.
Prepare joumal entries for Beme, the lessor, for Year and Year
