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Hello, I have an accounting question. Crane Limited has signed a lease agreement with Lantus Corp. to lease equipment with an expected lifespan of eight

Hello, I have an accounting question.

Crane Limited has signed a lease agreement with Lantus Corp. to lease equipment with an expected lifespan of eight years, no estimated salvage value, and a cost to Lantus, the lessor of $178,100. The terms of the lease are as follows:

The lease term begins on January 1, 2019, and runs for 5 years.
The lease requires payments of $39,887 at the beginning of each year starting January 1, 2019.
At the end of the lease term, the equipment is to be returned to the lessor.
Lantus implied interest rate is 6%, while Cranes borrowing rate is 7%. Crane uses straight-line depreciation for similar equipment. The year-end for both companies is December 31.

Assume that both companies follow ASPE.

Determine the present value of the minimum lease payments. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275.)

Present Value $

Prepare Cranes lease amortization schedule using the effective interest method. (Round answers to 0 decimal places, e.g. 5,275.)

Date Payment Interest Principal Balance
January 1, 2019 $
January 1, 2019 $ $ $
January 1, 2020
January 1, 2021
January 1, 2022
January 1, 2023
$ $ $

Prepare the 2019 journal entries for Crane Limited. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

(To record inception of lease.)

(To record lease payment.)

(To record interest.)

(To record depreciation expense.)

Thank you

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