Question 6 (1 point) Catalogue Corp. (CC) is a national electronics leasing company. On January...
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Question 6 (1 point) Catalogue Corp. (CC) is a national electronics leasing company. On January 1, 2020, Lemon Law Firm LLP (Lemon) enters into a new lease agreement with CC. The lease is to be effective immediately and is for a 10-year term at an implicit rate of 6%, which is not known to Lemon. Lemon has an incremental borrowing rate (IBR) of 7%. Annual payments will be $15,163, due at the beginning of each year. The equipment has a fair value (FV) of $125,000 and a useful life of 12 years. The FV of the equipment at the end of the lease is $30,000. CC has offered Lemon the option to purchase at the end of the term of the lease for $12,000. Lemon follows IFRS for financial reporting. Which of the following is the most appropriate journal entry for Lemon to record at the inception of the lease? a) CR Lease liability $98,790 b) CR Lease liability $120,054 c) CR Lease liability $119,031 d) CR Lease liability $104,891
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