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Brief Exercise 21A-17 Bridgeport Corporation leases equipment from Falls Company on January 1, 2017. The...

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Accounting

Brief Exercise 21A-17

Bridgeport Corporation leases equipment from Falls Company on January 1, 2017. The lease agreement does not transfer ownership, contain a bargain purchase option, and is not a specialized asset. It covers 3 years of the equipments 8-year useful life, and the present value of the lease payments is less than 90% of the fair value of the asset leased. The annual lease payment is $43,000 at the beginning of each year, and Kingstons incremental borrowing rate is 6%, which is the same as the lessors implicit rate. Prepare all the necessary journal entries for Falls Company (the lessor) for 2017, assuming the equipment is carried at a cost of $264,000. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Date Account Debit Credit
1/1/17
12/31/17
12/31/17

Note: The first 12/31/17 journal entry is to record the recognition of the revenue each period. And for the second 12/31/17 entry is to recrod depreciation expense on the leased equipment.

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