On 11?2012ABC. Inc. enters into a 20-year non-cancelable lease for a piece of machinery owned...
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On Inc. enters into a year noncancelable lease for a piece of machinery owned by Inc. The lease calls for annual payments of $ payable at the beginning of each year of the lease ie first payment due on At the end of the lease, the right to use the machine transfers back to ABC, Inc. declined the choice to purchase the machine outright for $ and the economic life of the machine is believed to be years. There is also an option to renew the lease for an additional years at a reduced rate of $ This does not represent a bargain renewal option that ABC, Inc. is reasonably certain to use. ABC, Inc. uses a discount rate to calculate present values, and generally uses straight line depreciation to depreciate machines assuming a salvage value. In addition, ABC, Inc. spends $ to customize the machinery for use in their factory. They believe that this customization has a useful life of years.
What if any journal entryies should ABC, Inc. record on
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