Buy machine feb 21, 2015 1,200,000

Estimated useful life 10 year

Residual Value 0
Depreciation method SLM

March 1; lease the machine

Estimated useful life 4 year
monthly rental 15,600
purchase option No

Benefit and Risk of Ownership Test

estimated useful life vs lease contract duration test no
Uniqness of the assets n.a
Transfer risk and reward no
Option to buy at low price no
PV minimum rental payment substansial to FV asset n.a

Since there isn't capitalization criteria fulfill it is an operating lease

What expense should Sage record?

Sage is the lessee. The expense that should be report is equal to monthly rental payment.

Journal: Lessor Lesse

For the year ended dec 31, 2011
Cash 156,000 Rent expense
Rent Revenue 156,000 Cash
Journal to record payment and receipt of lease agreement

Depreciation exp 100,000

Acc. Depr-machine 100,000
Journal to record depreciation of asset

What income or loss before tax Hooke record at 31 Dec 2015

Rental revenue 156,000

less: Depreciation exp 100,000 Beban depresiasi utk 10 bulan
Income before tax 56,000
 Lesse

156,000
156,000
eipt of lease agreement

of asset
please take a look at another file provided