Leasing has become the number one method of external financing by U.S. companies. Reasons include each of the following except:
One of the five criteria for a finance lease specifies that the present value of the lease payments be equal to or greater than:
The lessee normally measures the lease liability to be recorded as the:
Crystal Corporation makes $2,700 payments every month for leasing office equipment. Crystal recorded a lease payment as follows:
| Account Title | Debit | Credit |
| Lease payable | 1,620 | |
| Interest expense | 1,080 | |
| Cash | 2,700 |
| Account Title | Debit | Credit |
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Southwestern Edison Company leased equipment from Hi-Tech Leasing on January 1, 2024. Hi-Tech manufactured the equipment at a cost of $88,500.
| Other information: | |
| Lease term | 3 years |
| Annual payments | $37,000 on January 1 each year |
| Life of asset | 3 years |
| Fair value of asset | $102,087 |
| Implicit interest rate | 9% |
| Incremental rate | 9% |
There is no expected residual value.
Required:
Prepare appropriate journal entries for Hi-Tech Leasing for 2024. Assume a December 31 year-end.
Note: If no entry is required for a transaction/event, select “No journal entry required” in the first account field. Round your answers to the nearest whole dollar amounts.