Crane Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2017. The lease is for an 8-year period and requires equal annual payments of $29,017 at the beginning of each year. The first payment is received on January 1, 2017. Crane had purchased the machine during 2016 for $119,000. Collectibility of lease payments by Crane is probable. Crane set the annual rental to ensure a 6% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Crane at the termination of the lease. Prepare all necessary journal entries for Crane for 2017
Suppose the collectibility of the lease payments was not probable for Crane. Prepare the necessary journal entry for the company in 2017
Suppose at the end of the lease term, Crane receives the asset and determines that it actually has a fair value of $1,320 instead of the anticipated residual value of $0. Record the entry to recognize the receipt of the asset for Crane at the end of the lease term