Exercise 21-11 The following facts pertain to a non-cancelable lease agreement between Larkspur Leasing Company and Crane Company, a lessee. May 1, 2020 Commencement date Annual lease payment due at the beginning of each year, beginning with May 1, 2020 Bargain purchase option price at end of lease term Lease term Economic life of leased equipment Lessor's cost Fair value of asset at May 1, 2020 Lessor's implicit rate Lessee's incremental borrowing rate $17,865.02 $7,000 5 years 10 years $65,000 $85,000 6 % 6 % The collectibility of the lease payments by Larkspur is probable. Click here to view factor tables. 12/31 /203 Interest Receivable 2685.40 Interest Revenue | 2685.40 Y 5/1/21 ATCash 17865.02 Lease Receivable UUUUUUU 13836.92 Interest Receivable 4028.10 12/31/215 12/31/ Interest Receivable 2131.92 Interest Revenue 12131.92 Exercise 21-12 (Part Level Submission) On January 1, 2020, Ivanhoe Company leased equipment to Flynn Corporation. The following information pertains to this lease. 1. 2. 3. 4. 5. 6. The term of the non-cancelable lease is 6 years. At the end of the lease term, Flynn has the option to purchase the equipment for $1,000, while the expected residual value at the end of the lease is $7,000. Equal rental payments are due on January 1 of each year, beginning in 2020. The fair value of the equipment on January 1, 2020, is $150,000, and its cost is $120,000. The equipment has an economic life of 8 years. Flynn depreciates all of its equipment on a straight-line basis. Ivanhoe set the annual rental to ensure a 7% rate of return. Flynn's incremental borrowing rate is 8%, and the implicit rate of the lessor is unknown. Collectibility of lease payments by the lessor is probable. Both the lessor and the lessee's accounting periods end on December 31. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (b) Calculate the amount of the annual rental payment. (Round answer to 0 decimal places, e.g. 5,275.) Annual rental payment $ SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT LINK TO VIDEO By accessing this Question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor. Attempts: 0 of 3 used