Lalonde
Ltd., a public company following IFRS, recently signed a lease for equipment
from Costner Ltd. The lease term is five years and requires equal rental
payments of $25,173 at the beginning of each year. The equipment has a fair
value at the lease’s inception of $112,400, an estimated useful life of five
years, and no residual value. Lalonde pays all executory costs directly to
third parties. The appropriate interest rate is 6%. Prepare Lalonde’s journal
entries at the inception of the lease.
Leased Equipment....................... 112,400
Lease
Obligation................... . 112,400
Lease Obligation........................ 25,173
Cash............................... 25,173
