Bosey Inc. is a manufacturer of web servers. On January 1, 2022, Bosey Inc. leases ten...

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Bosey Inc. is a manufacturer of web servers. On January 1, 2022, Bosey Inc. leases ten (10) servers to Pointed Inc. under a six-year noncancelable lease agreement. The following information about the lease and the servers is provided below: Equal annual payments that are due on January 1 each year provide Bosey Inc. with an 8% return on net investment. Relevant present value factors are found in the table below. Present value - single sum for 6 periods Present value - single sum for 12 periods Present value-ordinary annuity for 6 periods Present value-ordinary annuity for 12 periods 9.38507 4.0% 5.0% 6.0% 8.0% 0.79031 0.74622 0.70496 0.63017 0.62460 0.55684 0.49697 0.39711 5.24214 5.07569 4.91732 4.62288 8.86325 8.38384 7.53608 Titles to the servers pass to Pointed Inc. at the end of the lease. The fair value of each server is $60,000. The cost of each server to Bosey Inc. is $54,000. Each server has an expected useful life of six years. Collectability of the lease payments is probable. Required: a. Identify and briefly explain what type of lease this is for the lessor. b. Calculate the annual lease payment. (Rounded to nearest dollar.) c. Prepare a lease amortisation schedule for Bosey Inc. for the first two (2) years of the lease term. d. Prepare the journal entries for the lessor for 2022. e. Prepare the journal entries for the lessee for 2022. (2 marks) (4 marks) (5 marks) (5 marks) (4 marks) Bosey Inc. is a manufacturer of web servers. On January 1, 2022, Bosey Inc. leases ten (10) servers to Pointed Inc. under a six-year noncancelable lease agreement. The following information about the lease and the servers is provided below: Equal annual payments that are due on January 1 each year provide Bosey Inc. with an 8% return on net investment. Relevant present value factors are found in the table below. Present value - single sum for 6 periods Present value - single sum for 12 periods Present value-ordinary annuity for 6 periods Present value-ordinary annuity for 12 periods 9.38507 4.0% 5.0% 6.0% 8.0% 0.79031 0.74622 0.70496 0.63017 0.62460 0.55684 0.49697 0.39711 5.24214 5.07569 4.91732 4.62288 8.86325 8.38384 7.53608 Titles to the servers pass to Pointed Inc. at the end of the lease. The fair value of each server is $60,000. The cost of each server to Bosey Inc. is $54,000. Each server has an expected useful life of six years. Collectability of the lease payments is probable. Required: a. Identify and briefly explain what type of lease this is for the lessor. b. Calculate the annual lease payment. (Rounded to nearest dollar.) c. Prepare a lease amortisation schedule for Bosey Inc. for the first two (2) years of the lease term. d. Prepare the journal entries for the lessor for 2022. e. Prepare the journal entries for the lessee for 2022. (2 marks) (4 marks) (5 marks) (5 marks) (4 marks)

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Answer a This lease is a finance lease for the lessor In a finance lease the lessor transfers substa... View the full answer