Use
the information provided in BE20–18 about Lessee Corp. Assume that title to the
property will not be transferred to Lessee by the end of the lease term and
that there is also no bargain purchase option, but that the lease does meet
other criteria to qualify as a capital lease. Prepare the required entries made
by Lessee Corp. on January 1, 2011, and at its year end of December 31, 2011.
January 1, 2011
Leased Building........................ 150,000.00
Lease
Obligation................... 150,000.00
Lease Obligation....................... 14,146.14
Land Rental Expense.................... 9,430.76
Cash............................... 23,576.90
[($23,576.90 X $150,000 / $250,000) = $14,146.14]
December 31, 2011:
Interest Expense........................ 10,868.31
Interest
Payable
[($150,000.00 – $14,146.14) X 8%] 10,868.31
Depreciation Expense - Building......... 7,500.00
Accumulated
Depreciation - Building
($150,000 / 20).............. 7,500.00
