Culver Corporation entered into a lease agreement on January 1, 2020, to provide Sunland Company with a piece of machinery. The terms of the lease agreement were as follows. 1. The lease is to be for 3 years with rental payments of $13,698 to be made at the beginning of each year. 2. The machinery has a fair value of $64,000, a book value of $40,000, and an economic life of 8 years. 3. At the end of the lease term, both parties expect the machinery to have a residual value of $30,000, none of which is guaranteed. 4. The lease does not transfer ownership at the end of the lease term, does not have a bargain purchase option, and the asset is not of a specialized nature. 5. The implicit rate is 6%, which is known by Sunland. 6. Collectibility of the payments is probable. Click here to view factor tables. (a) V Your answer is correct. Evaluate the criteria for classification of the lease, and describe the nature of the lease. For the lessee, it is a operating lease V and for the lessor, it is a operating lease V eTextbook and Media List of Accounts Attempts: 3 of 4 used Using multiple attempts will impact your score. 50% score reduction after attempt 3 (b) V Your answer is correct. Prepare the amortization schedules Sunland will use over the lease term. SUNLAND COMPANY Lease Amortization Schedule Annuity-Due Basis Interest Reduction of te Annual Payment on Liability Lease Liability Lease Liability 20 38812 20 13698 13698 25114 21 13698 1507 12191 12923 22 13698 775 12923 0 Lease Expense Schedule (C) Amortization of (A) [B) Right-of-Use Asset Straight-Line Interest on (and Liability) Carrying Value of Expense Lease Liability (A-B) Right-of-Use Asset $ 38812 13698 1507 $ 12191 26621 13698 775 12923 13698 13698 0 13698 0(c) Prepare the 2020 journal entries for Sunland. (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 O decimal places e.g. 58,971.) Date Account Titles and Explanation Debit Credit Jan. 1 [To record lease) Jan. 1 (To record first lease payment) Dec. 31 (To record lease expense and amortization) eTextbook and Media List of Accounts Save for Later Attempts: 0 of 4 used Submit Answer Using multiple attempts will impact your score. 50% score reduction after attempt 3 (d) The parts of this question must be completed in order. This part will be available when you complete the part above