Giannis Corporation leases a building to Jabari, Inc. on January 1, 2017. The following facts pertain to the lease agreement.

1.The lease term is 10 years with equal annual rental payments of $3,449 at the end of each year.

2.Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature.

3.The building has a fair value of $34,000, a book value to Giannis of $22,000, and a useful life of 15 years.

4.At the end of the lease term, Giannis and Jabari expect the residual value of the building to be $12,000, and this amount is guaranteed by Money, Inc., a third party.

5.Giannis wants to earn a 5% return on the lease, and collectibility of the payments is probable.

A. 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

B. Prepare the journal entries to record the entries for Giannis for 2017 and 2018.

C.Prepare the journal entries for Jabari (the lessee) for 2017 and 2018, assuming the rate implicit in the lease is known to Jabari.

Giannis Corporation leases a building to Jabari, Inc. on January 1, 2017. The following facts pertain to the lease agreement. 1. The lease term is 10 years with equal annual rental payments of $3.449 at the end of each year. 2. Ownership does not transfer at the end of the lease term, there is no bargaln purchase opton, and the asset ls not of a 3. The building has a fair value of4,000, a book value to Giannis of $22,000, and a useful life of 15 years. 4At the end of the lease term, Glannis and Jabari expect the residual value of the building to be $12,000, and this amount is quaranteed by Money nc., a third party. 5. Giannis wants to earn a 5% retum on the lease, and collectibility of the payments is probable. (For calculation purposes, use 5 decinal places as displayed in the factor table provided.) Determine the nature of this lease to both Giannis and Jabari. The lease is a an to Glannis The lease is afan o labari. finanting lease INK TO TEXT operating lease Assume the present value of lease payments and third-party guarantee is s34,000 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 declmal places, e.g. 5,275.) GIANNIS CORPORATION (Lessor) Sales-Tvpe Lease Annual Lease Interest on Recovery of Date Payment Lease Receivable Lease Receivable Lease Receivable 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 12/31/25 12/31/26 12/31/26 GIANNIS CORPORATION (Lessor) Direct Financing Lease Interest on Annual Lease Recovery of Date Payment Lease Receivable Lease Receivable Lease Receivable 12/31/13 12/31/19 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 12/31/25 12/31/26 12/31/26 Giannis Corporation leases a building to Jabari, Inc. on January 1, 2017. The following facts pertain to the lease agreement. 1. The lease term is 10 years with equal annual rental payments of $3.449 at the end of each year. 2. Ownership does not transfer at the end of the lease term, there is no bargaln purchase opton, and the asset ls not of a 3. The building has a fair value of4,000, a book value to Giannis of $22,000, and a useful life of 15 years. 4At the end of the lease term, Glannis and Jabari expect the residual value of the building to be $12,000, and this amount is quaranteed by Money nc., a third party. 5. Giannis wants to earn a 5% retum on the lease, and collectibility of the payments is probable. (For calculation purposes, use 5 decinal places as displayed in the factor table provided.) Determine the nature of this lease to both Giannis and Jabari. The lease is a an to Glannis The lease is afan o labari. finanting lease INK TO TEXT operating lease Assume the present value of lease payments and third-party guarantee is s34,000 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 declmal places, e.g. 5,275.) GIANNIS CORPORATION (Lessor) Sales-Tvpe Lease Annual Lease Interest on Recovery of Date Payment Lease Receivable Lease Receivable Lease Receivable 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 12/31/25 12/31/26 12/31/26 GIANNIS CORPORATION (Lessor) Direct Financing Lease Interest on Annual Lease Recovery of Date Payment Lease Receivable Lease Receivable Lease Receivable 12/31/13 12/31/19 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 12/31/25 12/31/26 12/31/26