3. Oakridge Leasing Corporation signs an agreement on January 1, 2020, to lease equipment to Pharoah Limited. Oakridge and Pharoah follow ASPE. The following information relates to the agreement. The term of the non-cancellable lease is five years, with no renewal option. The equipment has an estimated economic life 1. of six years. 2. The asset's fair value at January 1, 2020, is $83,000. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value 3. of $6,100, which is not guaranteed. 4. Pharoah Limited assumes direct responsibility for all executory costs, which include the following annual amounts: $940 to Rocky Mountain Insurance Ltd. for insurance and $1.650 to James Township for property taxes. 5. The agreement requires equal annual rental payments of $20.398 to Oakridge, the lessor beginning on January 1, 2020. 6. The lessee's incremental borrowing rate is 15%. The lessor's implicit rate is 14% and is known to the lessee. Pharoah Limited uses the straight-line depreciation method for all equipment. Pharoah uses reversing entries when appropriate, 5. 7. 8. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE * Your answer is incorrect. N. Calculate the PV of the future minimum lease payments using any of the following methods: (1) factor tables, (2) a financial calculator, or (3) Excel functions. (Round factor values to 5 decimal places, eg. 1.25124 and final answers to O decimal places.es 1,452.) Present value $ 68377 Question 3 of 5 0.31/1 Your answer is partially correct. Prepare all of Pharoah's journal entries for 2020 and 2021 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume that the lessee's annual accounting period ends on December 31 and that Pharoah uses reversing entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account tries and enter for the amounts. Round answers to decimal places, eg. 5,275.) Date Account Tities and Explanation Debit Credit 1/1/20 Equipment under Lease Obligations under Lease 20398 Cash (To record inception of lease and first lease payment.) During 2020 Insurance Expense Cash (To record payment of insurance. ed During 2020 Property Tax Expense Cash (To record payment of property taxes.) 12/31/20 Interest Expense Obligations under Dose (To record interest.) 12/31/20 Depreciation Expense Accumulated Depreciation - Leased Equipment (To record depreciation expense.) Obligations under Lease 1/1/21 Interest Expense (To record interest accrual reversing entry) Obligations under Lease 1/1/21 Interest Expense assessmenteducation.wiley.com/was/ui/v2/assessment-player/index.html?launchid-1677007-95eb-1975-9516-66f6cb263616/question/2 ter 20 assignment Question 3 of 5 0.31/1 (To record payment of property taxes.) 12/31/20 Interest Expense Obligations under Lease 12/31/20 (To record interest.) Depreciation Expedie Accumulated Depreciation - Leased Equipment (To record depreciation expense.) Obligations under Lease 1/1/21 Interest Expense (To record interest accrual reversing entry) Obligations under Lease 1/1/21 Interest Expense Cash (To record lease payment.) During e to search C ter 20 assignment Question 3 of 5 0.31/1 III During 2021 Insurance Expense Cash (To record payment of insurance.) Property Tax Expense cash Dec. 31, 2021 (To record payment of property taxes.) Interest Expense 12/31/21 Obligations under Lease (To record interest.) Depreciation Expense Accumulated Depreciation Leased Equipment To record depreciation expense.) e Textbook and Media c 0.31/1 Your answer is partially correct. Prepare all of Pharoah's journal entries for 2020 and 2021 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume that the lessee's annual accounting period ends on December 31 and that Pharoah uses reversing entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account tries and enter for the amounts. Round answers to decimal places, eg. 5,275.) Date Account Tities and Explanation Debit Credit 1/1/20 Equipment under Lease Obligations under Lease 20398 Cash (To record inception of lease and first lease payment.) During 2020 Insurance Expense Cash (To record payment of insurance. ed During 2020 Property Tax Expense Cash (To record payment of property taxes.) 12/31/20 Interest Expense Obligations under Dose (To record interest.) 12/31/20 Depreciation Expense Accumulated Depreciation - Leased Equipment (To record depreciation expense.) Obligations under Lease 1/1/21 Interest Expense (To record interest accrual reversing entry) Obligations under Lease 1/1/21 Interest Expense assessmenteducation.wiley.com/was/ui/v2/assessment-player/index.html?launchid-1677007-95eb-1975-9516-66f6cb263616/question/2 ter 20 assignment Question 3 of 5 0.31/1 (To record payment of property taxes.) 12/31/20 Interest Expense Obligations under Lease 12/31/20 (To record interest.) Depreciation Expedie Accumulated Depreciation - Leased Equipment (To record depreciation expense.) Obligations under Lease 1/1/21 Interest Expense (To record interest accrual reversing entry) Obligations under Lease 1/1/21 Interest Expense Cash (To record lease payment.) During e to search C ter 20 assignment Question 3 of 5 0.31/1 III During 2021 Insurance Expense Cash (To record payment of insurance.) Property Tax Expense cash Dec. 31, 2021 (To record payment of property taxes.) Interest Expense 12/31/21 Obligations under Lease (To record interest.) Depreciation Expense Accumulated Depreciation Leased Equipment To record depreciation expense.) e Textbook and Media c