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Question 18 On January 1, 2020, Windsor Co. leased a building to Wildhorse Inc. The relevant information related to the lease

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Answer #1

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Date Particulars Debit Credit
1-Jan-20 Lease Receivable $1,993,646
Right of use asset $1,993,646
(To record cost of building)
1-Jan-20 Cash Dr $285,000
      To Lease revenue $285,000
(To record lease revenue)
31-Dec-20 Lease Receivable $153,777
Interest Revenue $153,777
(To record recognition of revenue for each period)
31-Dec-20 Depreciation Expense $199,363
         To Right of use asset $199,363
(To record depreciation expense )

Working:

Lease Payment $285000
Lease Term 10 years
Rate 9%
Lease Value $1993646.25
(285000*(1+5.9952))
Depreciation Expense = $199363.2
(1993632/10 years)
Interest $153776.88
((1993632-285000)*9%)
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