What journal entry would gold star make at january


On January 2, 2011, Gold Star Leasing Company leases equipment to Brick Co. with 5 equal annual payments of $40,000 each, payable beginning December 31, 2011. Brick Co. agrees to guarantee the $25,000 residual value of the asset at the end of the lease term. Bricks incremental borrowing rate is 10%, however it knows that Gold Stars implicit interest rate is 8%. What journal entry would Gold Star make at January 2, 2011 assuming this is a direct financing lease?

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Accounting Basics: What journal entry would gold star make at january
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