On Dec 31, 2021, Malton Corporation signed a five-year noncancelable lease for equipment from Brampton Co. The terms of the lease called for Malton to pay Brampton annual amounts of $50,000 each Dec 31, beginning with Dec 31, 2021, for five years with the equipment going back to the lessor at the end of the lease. The equipment has an estimated useful life of 5 years and no salvage value. Accordingly, Malton and Brampton account for this lease transaction as a finance and sales type lease respectively. The minimum lease payments were determined to have a present value and fair value of $208,493 at an effective interest rate of 10%.
Prepare a lease amortization table for the life of the lease.
Record Malton’s (Lessee) journal entries for 12/31/21, 12/31/22 & 12/31/23.
Record Brampton’s (Lessor) journal entries for 12/31/21 & 12/31/22.
Assume that Brampton manufactured the equipment for $155,000. Prepare Brampton’s journal entries for 12/31/21.
