1. Ayayai Corporation entered into an operating lease agreement to lease equipment from Badger, Inc. on January 1, 2020. The lease calls for annual lease payments of $40,000, beginning on January 1, for each of the 3 years of the lease. In addition, Badger will pay Ayayai $4,000 as a cash incentive for entering the lease by January 1, 2020. In relation to the lease agreement, Ayayai incurred the following costs.

Salaries of employees involved in the investigation of the lease		$2,000
Lease document preparation costs incurred after execution of the lease		500

Ayayais incremental borrowing rate is 9%. If the value of the lease liability is $110,364, what amount will Ayayai record as the value of the right-of-use asset on January 1, 2020, at commencement of the operating lease?

Value of the right-of-use asset

$

2. On December 31, 2019, Cullumber Company leased machinery from Terminator Corporation for an agreed upon lease term of 3 years. Cullumber agreed to make annual lease payments of $22,000, beginning on December 31, 2019. The expected residual value of the machinery at the end of the lease term is $11,000. Cullumber guarantees a residual value of $11,000 at the end of the lease term, which equals the expected residual value of the machinery. What amount will Cullumber record as its lease liability if the expected residual value at the end of the lease term is $7,000 and Cullumber guarantees a residual of $11,000. Its incremental borrowing rate is 6% and the implicit rate of the lease is unknown? (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to 0 decimal places, e.g. 5,275.)

Lease liability

$

3. On December 31, 2019, Sunland Company leased machinery from Terminator Corporation for an agreed upon lease term of 3 years. Sunland agreed to make annual lease payments of $20,500, beginning on December 31, 2019. The expected residual value of the machinery at the end of the lease term is $10,250, though Sunland does not guarantee any residual value to Terminator. What amount will Sunland record as its lease liability on December 31, 2019, if its incremental borrowing rate is 9% and the implicit rate of the lease is unknown? (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to 0 decimal places, e.g. 5,275.)

Lease liability

$