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Lease exercises: 1, On June 30, year 1, Warner, Inc. leased a warehouse equipment from Lilly, Inc. The lease agreement calls for Warner to make semiannual lease payments of $546,915 over a four-year lease term (also the asset's useful life), payable each June 30 and December 31, with the first payment at June 30, year 1. Warner's incremental borrowing rate is 12%, the same rate Lilly used to calculate lease payment amounts. Lilly manufactured the equipment at a cost of $2.8 million. Required: 1. Prepare the appropriate entries for both (a) the lessee and (b) the lessor from the beginning of the lease through the end of year 1 2. prepare amortization table for two years 3. Explain what type of lease is for both, the lessee and the lessor. 2, On January 1, year 1, Mitchell-Marsh Services, Inc., a computer software training firm, leased several computers under a two-year operating lease agreement from Global Computers Corporation, which routinely finances equipment for other firms at an annual interest rate of 8%. The contract calls for four rent payments of $15,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by Global Computers at a cost of $120,000 and were expected to have a useful life of six years with no residual value. Both firms record amortization and depreciation semiannually Required: Prepare the appropriate entries for both (a) the lessee and (b) the lessor through the end of year 1 Present Value of an Annuity Due of $1 TABLE 6 (1+ i x (1i i PVAD= n/i 5.5% 4.0% 4.5% 5.0% 6.0% 1.00000 1.00000 1.00000 1.00000 1.00000 1.94787 1.94340 2 1.96154 1.95694 1.95238 2.88609 2.87267 2.85941 2.84632 2.83339 4 3.77509 3.74896 3.72325 3.69793 3.67301 4.62990 4.58753 4.54595 4.50515 4.46511 5.21236 5.45182 5.38998 5.32948 5.27028 6 7 6.24214 6.15787 6.07569 5.99553 5.91732 8 7.00205 6.89270 6.78637 6.68297 6.58238