Exercise 21A-2 a-c On December 31, 2016, Splish Brothers Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Splish Brothers to make annual payments of $8,634 at the beginning of each year, starting December 31, 2016. The machine has an estimated useful life of 6 years and a $4,900 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Splish Brothers uses the straight-line method of depreciation for all of its plant assets. Splish Brothers's incremental borrowing rate is 6%, and the lessor's implicit rate is unknown. Click here to view the factor table. Your answer is correct. What type of lease is this? finance This is a/an lease. SHOW LIST OF ACCOUNTS SHOW SOLUTION SHOW ANSWER LINK TO TEXT LINK TO TEXT Your answer is correct. Compute the present value of the lease payments. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to o decimal places, e.g. 5,275.) Present value of the lease payments 38552 Date Account Titles and Explanation Debit Credit 12/31/16 v Machinery Lease Liability (To record the lease) 12/31/17 Lease Liability Cash (To record first lease payment) x 12/31/17 Depreciation Expense Accumulated Depreciation-Capital Leases (To record amortization of the right-of-use asset) 12/31/17 Lease Liability X Interest Payable cash (To record interest expense)