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At January 1, 2021, Café Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement. The lea
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Answer -

Particulars Explanation Amount ($)
1. Effect on earnings

= Lease revenue - Depreciation

= $34000 - ($261000 / 13 years)

= $34000 - $20077

= $13923

13923
2. (a) Equipment balance (net, end of year)

= Restaurant equipment (cost) - Accumulated depreciation

= $261000 - ($261000 / 13 years)

= $261000 - $20077

= $240923

240923
2. (b) Deferred lease revenue Annual lease payments 34000
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