On January 1, 2018, Rick\'s Pawn Shop le three years. Rick\'s had no Annual leas

Question

On January 1, 2018, Rick's Pawn Shop le three years. Rick's had no Annual lease at the are $18,000 due on 31 of each year, c of the third year, January 1, 2020, Rick's had made to the truck whose cost could be of the e was "reasonably certain." The (Use appropriate o2124 factor(s) from the tables 1. Prepare the journal entry, if any, at the beginning of the third year for the lessee to account 2. Prepare the journal entry, if any, at the beginning of the third year for the lessor to account for the re of the third year for the lessee to for the reassessment. (If no entry Journal entry worksheet

Explanation / Answer

A As per ASC 840-Operating Leases & ASC 842-Leases (Lessee Books) Jan.1, 2020 Right to Use A/c Dr. $ 76,436.35 To Lease Liability A/c $ 76,436.35 (Present value of lease liability for 4 years, discounted at rate 4 percent) Right to Use A/c Dr. To Deferred Expenses A/c (For renovation expenses incurred) B As per ASC 840-Operating Leases & ASC 842-Leases (Lessor Books) Jan.1, 2020 Lease Receivable A/c Dr. $ 63,827.11 To Lease Liability A/c $ 63,827.11 (Present value of lease liability for 4 years, discounted at rate 5 percent)

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