Use
the information for Wing Corporation and Sharda Inc. from BE20–9. Assume that
Sharda, the lessor, has a June 30 year end. Prepare Sharda’s entry on August
15, 2011, and any adjusting entry needed on June 30, 2012.
In
BE Wing Corporation enters into a lease with Sharda Inc, a lessor, on August
15, 2011, that does not transfer ownership or contain a bargain purchase
option. Both Wing and Sharda use IFRS. The lease covers three years of the
equipment’s eight-year useful life, and the present value of the minimum lease
payments is less than 90% of the equipment’s fair market value. Prepare Wing’s
journal entry to record its August 15, 2011 annual lease payment of $31,500.
August 15, 2011
Cash.................................... 31,500
Unearned
Rental Income.............. 31,500
June 30, 2012
Unearned Rental Income ................. 27,563
Rental Income ($31,500 ÷ 12 X 10.5). 27,563
