Anthony Incorporated leases a piece of machinery to Irving Company on January 1, 2020, under the following terms. 1. 2. 3. The lease is to be for 4 years with rental payments of $12,471 to be made at the beginning of each year. The machinery' has a fair value of $67,000, a book value of $50,000, and an economic life of 10 years. At the end of the lease term, both parties expect the machinery to have a residual value of $25,000. To protect against a large loss, Anthony requests Irving to guarantee $17,500 of the residual value, which Irving agrees to do. The lease does not transfer ownership at the end of the lease term, does not have any bargain purchase options, and the asset is not of a specialized nature. The implicit rate is 5%, which is known by Irving. Collectibility of the payments is probable. 4. 5. 6. (n) Periods 2% 21/2% 4% 5% 6% 1 1.02000 2 1.04040 1.06121 1.08243 1.10408 3 FVFni = (1 + i)" 3% 1.03000 1.06090 1.09273 1.12551 1.15927 1.02500 1.05063 1.07689 1.10381 1.13141 1.04000 1.08160 1.12486 1.16986 1.21665 1.05000 1.10250 1.15763 1.21551 1.27628 1.06000 1.12360 1.19102 1.26248 1.33823 4 5 6 7 8 1.12616 1.14869 1.17166 1.19509 1.21899 1.15969 1.18869 1.21840 1.24886 1.28008 1.19405 1.22987 1.26677 1.30477 1.34392 1.26532 1.31593 1.36857 1.42331 1.48024 1.34010 1.40710 1.47746 1.55133 1.62889 1.41852 1.50363 1.59385 1.68948 1.79085 9 10 11 1.89830 12 2.01220 13 1.24337 1.26824 1.29361 1.31948 1.34587 1.31209 1.34489 1.37851 1.41297 1.44830 1.38423 1.42576 1.46853 1.51259 1.55797 1.53945 1.60103 1.66507 1.73168 1.80094 1.71034 1.79586 1.88565 1.97993 2.07893 2.13293 14 2.26090 2.39656 15 16 1.87298 17 18 1.37279 1.40024 1.42825 1.45681 1.48595 1.48451 1.52162 1.55966 1.59865 1.63862 1.60471 1.65285 1.70243 1.75351 1.80611 1.94790 2.02582 2.10685 2.19112 2.18287 2.29202 2.40662 2.52695 2.65330 2.54035 2.69277 2.85434 3.02560 3.20714 19 20 21 2.78596 2.92526 22 23 1.51567 1.54598 1.57690 1.60844 1.64061 1.67958 1.72157 1.76461 1.80873 1.85394 1.86029 1.91610 1.97359 2.03279 2.09378 2.27877 2.36992 2.46472 2.56330 2.66584 3-39956 3.60354 3.81975 4.04893 4.29187 3.07152 3.22510 3-38635 24 25 26 27 28 1.67342 1.70689 1.74102 1.77584 1.81136 1.90029 1.94780 1.99650 2.04641 2.09757 2.15659 2.22129 2.28793 2.35657 2.42726 2.77247 2.88337 2.99870 3.11865 3.24340 3.55567 3.73346 3.92013 4.11614 4.32194 4-54938 4.82235 5.11169 5-41839 5-74349 29 30 31 32 33 1.84759 1.88454 1.92223 1.96068 1.99989 2.15001 2.20376 2.25885 2.31532 2.37321 2.50008 2.57508 2.65234 2.73191 2.81386 3.37313 3.50806 3.64838 3.79432 3.94609 4.53804 4.76494 5.00319 5.25335 5.51602 6.08810 6.45339 6.84059 7.25103 7.68609 34 35 36 37 2.03989 2.08069 2.12230 2.16474 2.20804 38 2.43254 2.49335 2.55568 2.61957 2.68506 2.89828 2.98523 3.07478 3.16703 3.26204 4-10393 4.26809 4.43881 4.61637 4.80102 5.79182 6.08141 6.38548 6.70475 8.14725 8.63609 9.15425 9.70351 10.28572 39 40 7.03999 Evaluate the criteria for classification of the lease, and describe the nature of the lease. For the lessee, it is a , and for the lessor, it is a finance lease operating lease sales-type lease e Textbook and Prepare the journal entries for Irving for the year 2020. (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 titles and enter O for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.) Date Account Titles and Explanation Debit Credit Jan. 1 (To record lease) Jan. 1 (To records first lease payment) Dec. 31 (To record accrued interest) Dec. 31 (To record amortization expense) Prepare the journal entries for Anthony for the year 2020. (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 titles and enter for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to decimal places e.g. 5,275.) Debit Credit Date Account Titles and Explanation Jan. 1 (To record lease) Jan. 1 (To record first lease payment) Dec. 31 (To record lease revenue) Evaluate the criteria for classification of the lease, and describe the nature of the lease, assuming that Irving did not guarantee any amount of the expected residual value. , and for the lessor, it is a For the lessee, it is a finance lease operating lease e Textbook and sales-type lease Suppose Irving did not guarantee any amount of the expected residual value. Prepare the journal entries for Irving for the year 2020. (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 titles and enter O for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.) Debit Credit Date Account Titles and Explanation Jan. 1 (To record lease) Jan. 1 (To record first lease payment) Dec. 31 (To record interest and amortization) Suppose Irving did not guarantee any amount of the expected residual value. Prepare the journal entries for Anthony for the year 2020. (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 titles and enter for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.) Debit Credit Date Account Titles and Explanation Jan. 1 (To record lease payments) Dec. 31 (To record lease revenue) Dec. 31 (To record depreciation)