Assume that IBM (USA) leased equipment that was carried at a cost of £120,000 to Swander plc. The term of the lease is 6 years beginning December 31, 2018, with equal rental payments of £30,044 beginning December 31, 2018. The fair value of the equipment at commencement of the lease is £150,001. The equipment has a useful life of 6 years with no residual value. The lease has an implicit interest rate of 8%, no bargain purchase option, and no transfer of title. Collectibility of lease payments for IBM is probable. Prepare IBM’s December 31, 2018, journal entries at commencement of the lease.
Assume that IBM USA leased equipment that was carried at