Question

Briarwood Company enters into a lease for the use of a new piece of equipment. The term of the lease is 3 years, and Briarwood estimates the economic life of the equipment to be 4 years. The present value of the lease payments is $58,000. The lease is considered a finance lease. The journal entry to record the initial transaction will include a

Answer 1

Answer:

Dr. Right of use asset $58,000; Cr. Lease liability $58,000

Explanation:

                                       Journal entry

Date     General Journal                       Debit       Credit

            Right of use of asset             $58,000

                    Lease Liability                                  $58,000

            (Entry to record the initial transaction)