Discuss the nature of this lease for both the lessee and the lessor. This is a for Riverbed. This is a for Cullumber. List of Accounts Attempts: 0 of 5 used Question 5 of 5 (To record amoxtization.) (To record interest.) (To record amortization.) (To record interest) eTextbook and Media List of Accounts Semplarbiter Attempts: 0 of 5 used Prepare the journal entries Riverbed would make in 2020 and 2021 related to the lease arrangernent. (Credit actount titles are outomoticolly indentrd when amount is entered. Do not indent manuolly. II no entry is required, select "No Entry" for the occount titles and enter 0 for the amounts. Round onswers to 0 decimal places ey. 58,972. Record journal entries in the arder presented in the problem. Cullumber Leasing Company agrees to lease equipment to Riverbed Corporation on January 1, 2020. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. 2. The cost of the machinery is $473,000, and the fair value of the asset on January 1,2020 , is $746,000. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $50,000. Riverbed estimates that the expected residual value at the end of the lease term will be 50,000 . Riverbed amortizes all of its leased equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on January 1,2020. 5. The collectibility of the lease payments is probable. 6. Cullumber desires a 10% rate of return on its investments. Riverbed's incremental borrowing rate is 11%, and the lessor's implicit rate is unknown. (Assume the accounting period ends on December 31.) Click here to view factor tables. Prepare the journal entries Cullumber would make in 2020 and 2021 related to the lease arrangement iCredit occount titles are avtomatically indented when amount is entered. Do not indent manually, If no entry is requined, select "No Entry" for the occount tittes and enter 0 for the amounts, Round answers to 0 decimal places es, 58,972. Record journal entries in the order presented in the problem.) Suppose Riverbed expects the residual value at the end of the lease term to be $40,000 but still guarantees a residual of $50,000. Compute the value of the lease liability at lease commencement. Lease liability Calculate the amount of the annual rental payment required. (Round present value foctor caiculotions to 5 decimal places, es. 1.251 .24 and the finol answer to 0 docimal ploces es. 58,972) Annual rental payment eTextbook and Media List of Accounts Attempts: 0 of 5 used (c) Compute the value of the lease liability to the lessee. (Round present value factor colculations to 5 decimal ploces, es. 1.25124 and the final answer to 0 decimal places es 58.972 . Present value of minimum lease payments $
