CPA Exam Question #1 (Bonus – 2 percent) An eight-year, capi…

CPA Exam Question #1 (Bonus – 2 percent) An eight-year, capital lease entered into on March 30, 2011, specified equal minimum annual lease payments due on March 30 of each year.  The first minimum annual lease payment, paid on March 30, 2011, consists of which of the following?

On 1/1/2012 ABC, Inc. enters into a 10-year non-cancelable l…

On 1/1/2012 ABC, Inc. enters into a 10-year non-cancelable lease for a piece of machinery owned by XYZ, Inc. The lease calls for annual payments of $10,000, payable at the beginning of each year of the lease (first payment due on 1/1/2012).  At the end of the lease, ownership transfers to ABC, Inc.  XYZ, Inc. purchased this machine on 12/31/2011 for $46,320, and the economic life of the machine is believed to be 20 years.  Both ABC, Inc. and XYZ, Inc. use an 8% discount rate to calculate present values.   What (if any) journal entry(ies) should XYZ, Inc. record on 1/1/2012 (Note, you can ignore depreciation)?