At the beginning of $2024,$ VHF Industries acquired a machine with a fair value of $$6,000,000$ by signing a four$-$year lease, which is the expected useful life of the machine passing. The lease is payable in four annual payments of $$1,892,825$ at the end of each year. $($FV of $$1,$ PV of $$1,$ FVA of $$1,$ PVA of $$1,$ FVAD of $$1$ and PVAD of $$1)($Use appropriate factor$($s$)$ from the tables provided.$)$

Required:

What is the effective rate of interest implicit in the agreement?

$2-4.$ Prepare the lessee's journal entries at the inception of the lease, the first lease payment at December $31,2024$ and the second lease payment at December $31,2025.$

Suppose the fair value of the machine and the lessor's implicit rate were unknown at the time of the lease, but that the lessee's incremental borrowing rate of interest for notes of similar risk was $11\%.$ Prepare the lessee's journal entries for $2024.$

Complete this question by entering your answers in the tabs below.

Suppose the fair value of the machine and the lessor's implicit rate were unknown at the time of the lease, but that the lessee's incremental borrowing rate of interest for notes of similar risk was $11\%.$ Prepare the lessee's journal entries for $2024.($If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field. Enter your answers in whole dollars and not in the millions of dollars. Round your answers to nearest whole dollars.$)$

Show less $\frac{?}{{?}_{\frac{?}{?}}}$

Journal entry worksheet

$1$

$2$

$3$

Journal entry worksheet

$1$

$2$

$3$

Record the lease payment and the interest expense for the year.

Journal entry worksheet

$2$

Record the depreciation of the ROU asset.