Teal Mountain Company leased equipment from Costner Company, beginning on December 31, 2024. The lease term is 5 years and requires equal rental payments of $73,118 at the beginning of each year of the lease, starting on the commencement date (December 31, 2024). The equipment has a fair value at the commencement date of the lease of $310,000, an estimated useful life of 5 years, and no estimated residual value. The appropriate interest rate is 9%. Click here to view factor tables. Prepare Teal Mountain's 2024 and 2025 journal entries, assuming Teal Mountain depreciates similar equipment it owns on a straight- line basis. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Date 12/31/24 12/31/24 Account Titles and Explanation Right-of-Use Asset Lease Liability (To record lease liability) Lease Liability Cash (To record lease payment) Debit Credit
Teal Mountain Company leased equipment from Costner Company, beginning on December 31, 2024. The lease term is 5 years and requires equal rental payments of $73,118 at the beginning of each year of the lease, starting on the commencement date (December 31, 2024). The equipment has a fair value at the commencement date of the lease of $310,000, an estimated useful life of 5 years, and no estimated residual value. The appropriate interest rate is 9%. Click here to view factor tables. Prepare Teal Mountain's 2024 and 2025 journal entries, assuming Teal Mountain depreciates similar equipment it owns on a straight- line basis. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Date 12/31/24 12/31/24 Account Titles and Explanation Right-of-Use Asset Lease Liability (To record lease liability) Lease Liability Cash (To record lease payment) Debit Credit
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 3E: Lessee Accounting Issues Sax Company signs a lease agreement dated January 1, 2019, that provides...
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Transcribed Image Text:Teal Mountain Company leased equipment from Costner Company, beginning on December 31, 2024. The lease term is 5 years and
requires equal rental payments of $73,118 at the beginning of each year of the lease, starting on the commencement date (December
31, 2024). The equipment has a fair value at the commencement date of the lease of $310,000, an estimated useful life of 5 years, and
no estimated residual value. The appropriate interest rate is 9%.
Click here to view factor tables.
Prepare Teal Mountain's 2024 and 2025 journal entries, assuming Teal Mountain depreciates similar equipment it owns on a straight-
line basis. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent
manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. For calculation purposes, use 5 decimal
places as displayed in the factor table provided and round final answers to O decimal places, e.g. 5,275. Record journal entries in the order
presented in the problem.)
Date
12/31/24
12/31/24
12/31/25
Account Titles and Explanation
Right-of-Use Asset
Lease Liability
(To record lease liability)
Lease Liability
Cash
(To record lease payment)
Interest Expense
Debit
Credit
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