Business, 07.05.2021 17:50 TombRaider167

LeBron James (LBJ) Corporation agrees on January 1, 2020, to lease equipment from Cavaliers, Inc. for 3 years. The lease calls for annual lease payments of $23,000 at the beginning of each year. The lease does not transfer ownership, nor does it contain a bargain purchase option, and is not a specialized asset. In addition, the useful life of the equipment is 10 years, and the present value of the lease payments is less than 90% of the fair value of the equipment. Prepare LBJ's journal entries on January 1, 2020 (commencement of the operating lease), and on December 31, 2020. Assume the implicit rate used by the lessor is unknown, and LBJ's incremental borrowing rate is 6%. BE21.15
Account TitlesDebitCredit
01/01/20
cash 23000
lease liability 23000
LEBRON JAMES CORPORATION
Schedule A - Lease Amortization Schedule
Annuity-Due Basis
InterestReduction
Annual(6%) onof LeaseLease
DatePaymentLiabilityLiabilityLiabil ity
1/1/20
1/1/20
1/1/21
1/1/22

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