eiretei Company signed a lease contract to use a building for the next 25 years.
ID: 2705427 • Letter: E
Question
eiretei Company signed a lease contract to use a building for the next 25 years. The lease contract requires payments of $66,001 to be made at the end of each year for the next 25 years. If the building had been purchased instead of leased, it would have cost $600,000. Because the payments are not made until the end of the year, no cash changed hands on the day the building was leased, which is also the day the company started using the building. This lease is accounted for as an operating lease.Make the journal entry necessary to record this transaction. If no entry is required, select "no entry required" from dropdown and leave the dollar entry box blank.
Explanation / Answer
no entry required
Because no cash changed hands. Entry will be made at the end of Year 1
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