Exercise 21-18 On January 1, 2020, a machine was purchased for $1,180,000 by Sage Hill Co. The machine is expected to have an 8-year life with no salvage value. It is to be depreciated on a straight-line basis. The machine was leased to Oriole Inc. for 3 years on January 1, 2020, with annual rent payments of $270,000 due at the beginning of each year, starting January 1, 2020. The machine is expected to have a residual value at the end of the lease term of $562,500, though this amount is unguaranteed. Click here to view factor tables (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) How much should Sage Hill report as income before income tax on this lease for 2020? Income before income tax ! 122500 Record the journal entries Oriole would record for 2020 on this lease, assuming its incremental borrowing rate is 5% and the rate implict in the lease is unknown. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit To record the lost) {To record lease payment) to record the lease) (To record lease payment) Suppose the lease was only for one year (only one payment of the same amount at commencement of the lease), with a renewal option at market rates at the end of the lease, and Oriole elects to use the short term lease exception Record the journal entry Oriole would record for 2020 on this lease. (Credit account titles are automatically indented when the amount is entered. De not indent manually.) Date Account Titles and Explanation Debit Credit 1/1/20