On 01-01-15, Z leased a machine with a useful life of 5 years. The noncancelable...
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On 01-01-15, Z leased a machine with a useful life of 5 years. The noncancelable lease agreement required Z to make 4 annual lease payments of $25,000 starting 12-31-15. After making the last lease payment, Z will retain the machine. Zs borrowing rate on 01-01-15 was 4%. Z uses a straight-line depreciation method (no residual value) and only prepares AJEs every December 31. Determine if this is a short-term or a long-term lease. If it is a long-term lease, determine if it is a long-term finance lease or a long-term operating lease. Prepare the lease-related entries Z should make on:
01-01-15
12-31-15
12-31-16
12-31-17
12-31-18
12-31-19
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