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Cullumber Company leases a building to Marin, Inc. on January 1, 2020. The following facts pertain to the lease agreement. 1. 2. 3. The lease

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Cullumber Company leases a building to Marin, Inc. on January 1, 2020. The following facts pertain to the lease agreement. 1. 2. 3. The lease term is 6 years, with equal annual rental payments of $4,150 at the beginning of each year. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature The building has a fair value of $24,000, a book value to Cullumber of $17.000, and a useful life of 7 years. At the end of the lease term, Cullumber and Marin expect there to be an unguaranteed residual value of $4,250. Cullumber wants to earn a return of 7% on the lease, and collectibility of the payments is probable. Marin was unaware of the implicit rate used in the lease by Cullumber and has an incremental borrowing rate of 8%. 5. Click here to view factor tables. How would Cullumber (lessor) and Marin (lessee) classify this lease? Cullumber would classify the lease as a sales-type lease. Marin would classify the lease as a finance lease How would Cullumber initially measure the lease receivable, and how would Marin initially measure the lease liability and right-of- use asset? (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to decimal places, e.g. 5,275) Cullumber Lease receivable $ Present value of lease pay $ Marin Lease Liability/Right-of-Use Asset $

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