Question

Newton Labs leased chronometers from Brookline Instruments on January 1, 2021. Brookline Instruments manufactured the chronometers...

Newton Labs leased chronometers from Brookline Instruments on January 1, 2021. Brookline Instruments manufactured the chronometers at a cost of $340,000. The chronometers have a fair value of $442,000. Appropriate adjusting entries are made quarterly. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables.)

Related Information:
Lease term 5 years (20 quarterly periods)
Quarterly lease payments $ 24,729 at Jan. 1, 2021, and at Mar. 31, June 30, Sept. 30, and Dec. 31 thereafter.
Economic life of asset 6 years
Estimated residual value of chronometers at end of lease term $ 19,086
Interest rate charged by the lessor 12%


Required:
1. Prepare appropriate entries for Newton Labs to record the arrangement at its commencement, January 1, 2021, and on March 31, 2021.
2. Prepare appropriate entries for Brookline Instruments to record the arrangement at its commencement, January 1, 2021, and on March 31, 2021.

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Answer: 378943 Date Journal D ebit Credit Requirement 1 1 1-Jan-21 Right-to-use asset 378943 Lease payable (To record the begRequirement 2 1 1-Jan-21 Lease receivable Right-to-use asset (To record the beginning of the lease and sales revenue for BrooWork note: Lease interest schedule (carring value*2%) (Lease payment-interest) (carring value-Repayment of interest) Lease in

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