Essay
Dennis Corporation entered into a long-term lease for a piece of equipment.The lease term calls for an annual payment of $2,000 for six years,which approximates the useful life of the equipment.Assume a discount factor of 16 percent.(Note: Present value of a single sum factor at six years and 16% is 0.410; present value of an annuity factor at six years and 16% is 3.685.)Round answers to the nearest dollar.
a.Prepare the entry without explanation to record the leased equipment.
b.Prepare the entry without explanation to record annual depreciation,assuming the straight-line method and no residual value.
c.Prepare the entry without explanation to record the first annual payment of $2,000,after the company has had the equipment for one year.
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