Finorama, a lessor that is not a manufacturer, acquired a bottling line, carried on its balance sheet at a carrying amount of 300,000, equal to its fair value. At the commencement date of a finance lease of this line, Finorama pays in cash initial direct costs of 4,500. The present value at the implicit rate of the lease payments and the unguaranteed residual value is 304,500. Record Finorama's entry at the commencement date.
- Carrying amount of the bottling line
- 300,000
- Initial direct costs paid
- 4,500
- Present value at the implicit rate
- 304,500