Exercise 21-5 Culver Leasing Company leases a new machine that has a cost and fair value of $80,000 to Sharrer Corporation on a 3-year noncancelable contract. Sharrer Corporation agrees to assume all risks of normal ownership including such costs as insurance, taxes, and maintenance. The machine has a 3-year useful life and no residual value. The lease was signed on January 1, 2017. Culver Leasing Company expects to earn a 10% return on its investment. The annual rentals are payable on each December 31. (b) Prepare an amortization schedule that would be suitable for both the lessor and the lessee and that covers all the years involved. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.) Click here to view factor tables Rent Receipt/ Payment Interest Revenue/ Expense Reduction of Principal Receivable/ Liability 1/1/17 $ $ $ $ 12/31/17 12/31/18 12/31/19 Exercise 21-5 Culver Leasing Company leases a new machine that has a cost and fair value of $80,000 to Sharrer Corporation on a 3-year noncancelable contract. Sharrer Corporation agrees to assume all risks of normal ownership including such costs as insurance, taxes, and maintenance. The machine has a 3-year useful life and no residual value. The lease was signed on January 1, 2017. Culver Leasing Company expects to earn a 10% return on its investment. The annual rentals are payable on each December 31. (b) Prepare an amortization schedule that would be suitable for both the lessor and the lessee and that covers all the years involved. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.) Click here to view factor tables Rent Receipt/ Payment Interest Revenue/ Expense Reduction of Principal Receivable/ Liability 1/1/17 $ $ $ $ 12/31/17 12/31/18 12/31/19 xercise 21-12 On January 1, 2017, Culver Co. leased a building to Larkspur Inc. The relevant information related to the lease is as follows.

1. The lease arrangement is for 10 years.

2. The leased building cost $4,385,000 and was purchased for cash on January 1, 2017.

3. The building is depreciated on a straight-line basis. Its estimated economic life is 50 years with no salvage value.

4. Lease payments are $275,200 per year and are made at the end of the year.

5. Property tax expense of $86,900 and insurance expense of $9,300 on the building were incurred by Culver in the first year. Payment on these two items was made at the end of the year. 6. Both the lessor and the lessee are on a calendar-year basis. (a) Prepare the journal entries that Culver Co. should make in 2017.

(c) If Culver paid $29,900 to a real estate broker on January 1, 2017, as a fee for finding the lessee, how much should Culver Co. report as an expense for this item in 2017?

Expense should be reported