Please help me figure out the journal entries question and the balance sheet and income statement entries question from the information below for Redbird the lessee:
The following facts pertain to a noncancelable lease agreement between Sycamore Leasing Company and
Redbird Company, a lessee:
Inception date
January
Annual lease pmt due at the beg. of each
year, begimning with January
Residual value of the equipment at the end of
lease term, guaranteed by the lessee
Expected Residual value equipment at end of lease term
Lease term
Economic life of leased equipment
Fair value of equipment at January
Lessor's implicit rate
Lessee's incremental borrowing rate
The equipment will revert to the lessor at the end of the lease term. The lessee uses straightline amortization for
all leased equipment.
Prepare the appropriate journal entries for Redbird on and
Show what would be reported on the balance sheet for this lease for noncurrent assets, current and longterm
liabilities. Show what would be reported by Redbird in their income statement for interest expense and
amortization expense for this lease.
