Ayayai Incorporated leases a piece of equipment to Kingbird Corporation on January 1, 2020. The lease agreement called for annual rental payments of $4,683 at the beginning of each year of the 4-year lease. The equipment has an economic useful life of 6 years, a fair value of $24,100, a book value of $19,100, and both parties expect a residual value of $8,100 at the end of the lease term, though this amount is not guaranteed. Ayayai set the lease payments with the intent of earning a 5% return, and Kingbird is aware of this rate. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

Exercise 21-21 a-d Ayayai Incorporated leases a piece of equipment to Kingbird Corporation on January 1, 2020. The lease agreement called for annual rental payments of $4,683 at the beginning of each year of the 4- year lease. The equipment has an economic useful life of 6 years, a fair value of $24,100, a book value of $19, 100, and both part though this amount is not guaranteed. Ayayai set the lease payments with the intent of earning a 5% return, and Kingbird is aware of this rate. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Determine the nature of the lease to both Ayayai and Kingbird. The lease is a/an lease to Ayayai. The lease is a/an lease to Kingbird. Prepare the lease amortization schedule(s) for Kingbird for all 4 years of the lease. (Round answers to o decimal places, e.g. 5,275.) KINGBIRD CORPORATION Lease Amortization Schedule Annuity-Due Basis Reduction of Interest on Liability Lease Liability Annual Payment Lease Liability Date 1/1/20 1/1/20 1/1/21 1/1/22 1/1/23 Lease Expense (Straight-Line) Lease Expense Schedule Interest on Amortization of Lease Liability ROU Asset Carrying Value of ROU Asset Date 1/1/20 12/31/20 12/31/21 12/31/22 12/31/23 Prepare the journal entries for Kingbird for 2020 and 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit (To record the lease) (To record lease payment) Suppose Kingbird incurs initial direct costs of $700 related to the lease. Prepare the journal entries for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit (To record the lease) (To record lease payment) Click if you would like to Show Work for this question: Open Show Work