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Financial reporting FOR MORE CLASSES VISIT
www.tutorialoutlet.com MANAGEMENT DECISIONS AND
FINANCIAL REPORTING LEASCO COMPANY ACCOUNTING FOR
LEASES On January 1, 2008, Leasco (lessee) signed
a noncancelable agreement to lease equipment from
Rentco (lessor) for 10 year period. Annual
payments of 58,588 are due at the end of each
year (starting December 31, 2008). Assume both
firms use straight-line depreciation. 1. Assume
that the lease does not meet any of the four
criteria applicable to capital leases. Prepare
the lease entries during 2008 and 2009 for
Leasco. 2. Assume that ownership of the equipment
will be transferred to Leasco on December
31, 2017 (i.e., the end of the lease term) with
no required additional payment however,
the equipment is expected to be scrapped at that
time at no salvage value.
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