Exercise 20-9 On January 1, 2020, Lavery Corp, which follows ASPE, leased equipment to Carta Vista Ltd, which follows IFRS 16. Both Lavery and Carla Vista have calendar year ands. The following Information concerns this lease. 1. The term of the non-cancellable lease is six years, with no renewal option. The equipment reverts to the lessor at the termination of the tease, at which time it is expected to have a residual value (not guaranteed) of $6,900. Carla Vista Ltd. depreciates all its equipment on a straight line basis. 2. Equal rental payments are due on January 1 of each year, beginning in 2020, 3. The equipment's fair value on January 1, 2020, is $146,000 and its cost to Lavery is $111.000. 4. The equipment has an economic life of seven years. 5. Lavery set the annual rental to ensure a 119 rate of return. Carla Vista's Incremental borrowing rate is 12% and the lessor's implicitrate is unknown to the lessee 6. Collectibility of lease payments is reasonably predictable and there are no important uncertainties about any unrembursable costs that have not yet been incurred by the lesson Click here to view the factor tahle PRESENT VALUE OF L Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE FlYour answer is correct. to enmal indent manually. problem. Hound factor values to 5 decimal places, e.g. 1.25124 and final answers to decima u Date Account Titles and Explanation Debit Credit 146000 1/1/20 Equipment under Lease 139548 Lease Liability 6452 Cash (To record inception and payment of lease.) 23258 12/31/20 Accumulated Depreciation 23258 Accumulated Depreciati (To record depreciation expense.) 13109 12/31/20 Interest Expense 13109 Interest Payable (To record interest.) Data Account Titles and Explanation Debit Credit M 1/1/20 TLease Receivable 188730 Cost of Goods Sold 107311 Sales Revenue 142311 Inventory Cash (To record inception of lease and cost of goods sold.) 188730 1/1/2017 cash 188730 Lease Receivable (Collection of lease payment.) 12726 IN Interest Receivable 12726 Interest Income To record interest.)