Ivanhoe Manufacturing Ltd$.$ has signed a lease agreement with Oriole Leasing Inc. to lease some specialized manufacturing

equipment. The terms of the lease are as follows:

The lease is for $5$ years commencing January $1,2023.$

Ivanhoe must pay Oriole $$54,114$ an January $1$ of each year, beginning in $2023.$

Equipment of this type normally has an economic life of $6$ years.

Oriale has concluded, based on its review of tvanhoe's financial statements, that there is no unusual credit risk in this

situation. Orible will not incur any further costs with regard to this lease.

Oriale purchases this equipment directly from the manufacturer at a cost of $$202,026,$ and normally sells the equipment for

$$251,626.$

Ivanhoe's borrowing rate is $7\%$ Oriole's implied interest rate is $6\%,$ which is known to lvanhoe at the time of negotiating the

lease.

Ivanhoe uses the straight$-$line method to depreciate similar equipment.

Both lvanhoe and Oriole have calendar fiscal years $($year end December $31),$ and follow ASPE.

Click here to view the factor table PRESENT VALUE OF $1.$

Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE.

$($a$)$

Your answer is correct.

From Ivanhoe Manufacturing's perspective, is this a capital or operating lease?

Ivanhoe will classify this as a$[$n$]$ capital lease

eTextbook and Media

List of Accounts

$($c$)$

Your Answer

Prepare a lease amortization schedule for this lease. $($Round answers to $0$ decimal places, e$.$g $5,275.)$

Payment

Interest

Principal

$($d$)$PLEASE PREPARE THE JOURNAL ENTRIES

Your answer is partially correct.

Prepare the journal entries on Ivanhoe Manufacturing's books on January $1,2023.($List all debit entries before credit entries. Credit

account titles are autamatically 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.$)$