Diego Leasing Company agrees to provide La Jolla Company with equipment under a noncancelable lease...
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Accounting
Diego Leasing Company agrees to provide La Jolla Company with equipment under a noncancelable lease for years. The equipment has a year life, cost Diego $ and will have no residual value when the lease term ends. The fair value of the equipment is $ La Jolla agrees to pay all executory costs $ per year throughout the lease period directly to a third party. On January the equipment is delivered. Diego expects a return on its net investment. The five equal annual rents are payable in advance starting January
Required:
Assuming this is a salestype lease for the Diego and a finance lease for the La Jolla, prepare a table summarizing the lease and interest payments suitable for use by either party.
Next Level On the assumption that both companies adjust and close books each December prepare journal entries relating to the lease for both companies through December based on data derived in the table. Assume that La Jolla depreciates similar equipment by the straightline method.
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