Advanced Accounting 12th Edition by Joe Ben Hoyle,Thomas Schaefer , Timothy Doupnik

Exercise 75

On January 1, 2015, a city entered into the following leases for equipment items. Each of the leases qualifies as a capital lease. Initial payments are on December 31, 2015. An interest rate of 12 percent is viewed as appropriate. No bargain purchase options exist.

A) Prepare journal entries for the year 2015 for both of these leases for government-wide financial statements.
B) Prepare journal entries for the year 2015 for both of these leases for fund financial statements.