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Business, 15.05.2020 11:57 isaiahbjohnson1839

Ayayai Corporation leases equipment from Falls Company on January 1, 2020. The lease agreement does not transfer ownership, contain a bargain purchase option, and is not a specialized asset. It covers 3 years of the equipment’s 8-year useful life, and the present value of the lease payments is less than 90% of the fair value of the asset leased. The annual lease payment is $30,000 at the beginning of each year, and Ayayai’s incremental borrowing rate is 4%, which is the same as the lessor’s implicit rate.

Prepare Ayayai’s journal entries on January 1, 2020, and December 31, 2020.

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Ayayai Corporation leases equipment from Falls Company on January 1, 2020. The lease agreement does...
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