Amirante SA manufactures an X-ray machine with an estimated life of 12 years and leases it to Chambers Medical Center for a period of 10 years on 1 January 2020. The normal selling price of the machine is $299,140, and its guaranteed residual value at the end of the non-cancelable lease term is estimated to be $20,000. The hospital will pay rents of $40,000 at the beginning of each year. Amirante incurred costs of $180,000 in manufacturing the machine. Amirante has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 8%. Chambers Medical Center has an incremental borrowing rate of 8% and an expected residual value at the end of the lease of $10,000. Instructions

a. Discuss the nature of this lease in relation to the lessor, Amirante SA and compute the amount of each of the following items.

1. Lease receivable.

2. Sales price.

3. Cost of goods sold.

b. Prepare a 10-year lease amortization schedule for Amirante SA, the lessor.

c. Prepare all of the lessor's journal entries for the first year.

d. Compute the amount of the initial lease liability for Chambers Medical Center, the lessee.

e. Prepare a 10-year lease amortization schedule for Chambers Medical Center, the lessee.

f. Prepare all of the lessee's journal entries for the first year. Assume straight-line depreciation.