Business, 16.10.2020 14:01 hillisaiah734

Rumsfeld Corporation leased a machine on December 31, 2018, for a three-year period. The lease agreement calls for annual payments in the amount of $18,000 on December 31 of each year beginning on December 31, 2018. Rumsfeld has the option to purchase the machine on December 31, 2021, for $22,000 when its fair value is expected to be $32,000. The machine's estimated useful life is expected to be four years with no residual value. The appropriate interest rate for this lease is 10%. n/i PV of $1 PV, ordinary annuity PV, annuity due
1 period, 10% 0.90909 0.90909 1.00000
2 periods, 10% 0.82645 1.73554 1.90909
3 periods, 10% 0.75131 2.48685 2.73554

Required:
a. Calculate the amount to be recorded as a right-of-use asset and the associated lease payable.
b. Prepare Rumsfeld's journal entries for this lease for 2018 and 2019.

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Rumsfeld Corporation leased a machine on December 31, 2018, for a three-year period. The lease agree...

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