Larkspur Corporation manufactures drones. On December 31, 2019, it leased to Althaus Company a drone that had cost $104,
Posted: Sat May 07, 2022 8:35 pm
Larkspur Corporation manufactures drones. On December 31,
2019, it leased to Althaus Company a drone that had cost
$104,800 to manufacture. The lease agreement covers
the 5-year useful life of the drone and
requires 5 equal annual rentals of $37,400 payable
each December 31, beginning December 31, 2019. An interest rate
of 11% is implicit in the lease agreement. Collectibility of
the rentals is probable.
Prepare Larkspur’s December 31, 2019, journal entries.
2019, it leased to Althaus Company a drone that had cost
$104,800 to manufacture. The lease agreement covers
the 5-year useful life of the drone and
requires 5 equal annual rentals of $37,400 payable
each December 31, beginning December 31, 2019. An interest rate
of 11% is implicit in the lease agreement. Collectibility of
the rentals is probable.
Prepare Larkspur’s December 31, 2019, journal entries.