Question

Exercise 15-34 Lessor's Initlal direct costs; operating lease [LO15-4, 15-7] The following relate to an operating lease agreement a. The lease term is 3 years, beginning January 1, 2018. b. The leased asset cost the lessor $950,000 and had a useful life of elght years with no residual value. The lessor uses stralght-line depreclation for Its depreciable assets. C. Annual lease payments at the beginning of each year were $138,500. d. Incremental costs of negotlating costs of negotlating and consummating the completed lease transaction Incurred by the lessor were $4,650. Required: Prepare the approprlate entries for the lessor from the beginning of the lease through the end of the lease term. (Round your Intermediate and final answers to the nearest whole dollar amount. If no entry is required for a transaction/event, select "No Journal entry requlred" in the first account field.) Vlew transaction lat Journal entry worksheet 3 13 Record the cash received. Note: Enter debits before credits. Date Debit Credit General Journal January 01, 2018 Record entry Clear entry Vlew general Journal co

Answer 1

Date	Particulars	Debit	Credit
01-Jan-18	Cash	138500
	Lease revenue		138500
	( Being lease rental received)
01-Jan-18	Negotiating and consummating cost	4650
	Cash		4650
	(Incremental cost incurred )
31-Dec-18	Depreciation	118750
	Leased Asset		118750
	( Being depreciation charged on leased asset)
01-Jan-19	Cash	138500
	Lease revenue		138500
	( Being lease rental received)
31-Dec-19	Depreciation	118750
	Leased Asset		118750
	( Being depreciation charged on leased asset)
01-Jan-20	Cash	138500
	Lease revenue		138500
	( Being lease rental received)
31-Dec-20	Depreciation	118750
	Leased Asset		118750
	( Being depreciation charged on leased asset)