Crane Corporation enters into a year lease of equipment on December which requires annual payments of
$ each, beginning December In addition, Crane guarantees the lessor a residual value of $ at the end of the
lease. However, Crane believes it is probable that the expected residual value at the end of the lease term will be $ The
equipment has a useful life of years.
Prepare Cranes' December journal entries, assuming the implicit rate of the lease is and this is known to Crane. List all
debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry
is required, select No Entry" for the account titles and enter for the amounts. For calculation purposes, use decimal places as displayed in the
factor table provided and round final answers to decimal places eg
Click here to view factor tables.
Date
Account Titles and Explanation
December
Debit
Credit
To record the lease liability
December
To record lease payment
