BUS 203 Test IV SECTION 50 Points on January 2016. Rider Inc. leased a truck to Pine Valley The lease 1, qualifies as a capital lease under established by the accounting profession. The following information relates to this agreement 1. The lease term is ten years. The useful life of the truck is 15 years. 2. The lease agreement specifies that ownership of the asset be transferred to the lessee at the end of the lease term. 3. Lease payments are $8,800 per year (exclusive of executory costs) with the first payment due January 1,2016. 4. Pine Valley's incremental borrowing rate is15%. The lessors implicit rate is 10% and is to Pine Valley 5. Maintenance and other operating costs (executory costs), not included in the ease payments, are $1,500 and payable on June 1 of each year by Pine Valley 6. Pine Valley uses straight-line depreciation on all its assets. (note: review GAAP depreciation for capital leases) 7. Rider uses reversing journal entries where appropriate. 8. The present value factors for an annuity due are as follows: 15% 5.77158 10% 6.75902 instructions 1. Provide all necessary journal entries required of Pine Valley for the years 2016 and 2017 2. Complete the lease amortization schedule below (up to 1/1/19) (round all answers to the nearest dollar) Lease Lease Reduction Liability Balance Interest Date Payment