Giannis Corporation leases a building to Jabari, Inc. on January 1, 2017. The following facts pertain to| the lease agreement. 12/31/26 12/31/26 1. The lease term is 10 years with equal annual rental payments of $3,449 at the end of each year. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and 2. the asset is not of a specialized nature. The building has a fair value of $34,000, a book value to Giannis of $22,000, and a useful life of 15 3. years GIANNIS CORPORATION (Lessor) Lease Amortization Schedule Direct Financing Lease At the end of the lease term, Giannis and Jabari expect the residual value of the building to be 4 $12,000, and this amount is guaranteed by Money, Inc., a third party Annual Lease Payment Interest on Lease Receivable Recovery of Lease Receivable 5. Giannis wants to earn a 5% return on the lease, and collectibility of the payments is probable. Lease Receivable Date Determine the nature of this lease to both Giannis and Jabari. 1/1/17 The lease is a/an 12/31/17 to Giannis The options are financing or operating The lease is a/an 12/31/18 12/31/19 12/31/20 to Jabari 12/31/21 The options are financing or operating 12/31/22 Assume the present value of lease payments and third-party guarantee is $34,000 and the rate of return to amortize the net lease receivable to zero is 13.24%%. Prepare the amortization schedules Giannis would use to amortize the net lease receivable to zero. (Round answers to 0 decimal places, e.g. 5,275.) 12/31/23 12/31/24 GIANNIS CORPORATION (Lessor) Lease Amortization Schedule Sales-Type Lease 12/31/25 12/31/26 Annual Lease Payment Recovery of Lease Receivable Interest on Date Lease Receivable Lease Receivable 12/31/26 1/1/17 12/31/17 *Difference due to rounding 12/31/18 Prepare the journal entries to record the entries for Giannis for 2017 and 2018. (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.) 12/31/19 12/31/20 12/31/21 Account Titles and Explanation Debit Credit Date 12/31/22 1/1/17 12/31/23 12/31/24 12/31/25 Giannis Corporation leases a building to Jabari, Inc. on January 1, 2017. The following facts pertain to| the lease agreement. 12/31/26 12/31/26 1. The lease term is 10 years with equal annual rental payments of $3,449 at the end of each year. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and 2. the asset is not of a specialized nature. The building has a fair value of $34,000, a book value to Giannis of $22,000, and a useful life of 15 3. years GIANNIS CORPORATION (Lessor) Lease Amortization Schedule Direct Financing Lease At the end of the lease term, Giannis and Jabari expect the residual value of the building to be 4 $12,000, and this amount is guaranteed by Money, Inc., a third party Annual Lease Payment Interest on Lease Receivable Recovery of Lease Receivable 5. Giannis wants to earn a 5% return on the lease, and collectibility of the payments is probable. Lease Receivable Date Determine the nature of this lease to both Giannis and Jabari. 1/1/17 The lease is a/an 12/31/17 to Giannis The options are financing or operating The lease is a/an 12/31/18 12/31/19 12/31/20 to Jabari 12/31/21 The options are financing or operating 12/31/22 Assume the present value of lease payments and third-party guarantee is $34,000 and the rate of return to amortize the net lease receivable to zero is 13.24%%. Prepare the amortization schedules Giannis would use to amortize the net lease receivable to zero. (Round answers to 0 decimal places, e.g. 5,275.) 12/31/23 12/31/24 GIANNIS CORPORATION (Lessor) Lease Amortization Schedule Sales-Type Lease 12/31/25 12/31/26 Annual Lease Payment Recovery of Lease Receivable Interest on Date Lease Receivable Lease Receivable 12/31/26 1/1/17 12/31/17 *Difference due to rounding 12/31/18 Prepare the journal entries to record the entries for Giannis for 2017 and 2018. (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.) 12/31/19 12/31/20 12/31/21 Account Titles and Explanation Debit Credit Date 12/31/22 1/1/17 12/31/23 12/31/24 12/31/25
