Marin Leasing Company agrees to lease equipment to Headland Corporation on January 1, 2020. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. 2. The cost of the machinery is $ 541,000, and the fair value of the asset on January 1, 2020. is $760,000. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $ 45,000. Headland estimates that the expected residual value at the end of the lease term will be 45.000. Headland amortizes all of its leased equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on January 1, 2020, 5. The collectibility of the lease payments is probable. 6. Marin desires a 10% rate of return on its investments. Headland's incremental borrowing rate is 11%, and the lessor's implicit rate is unknown. (Assume the accounting period ends on December 31.) Click here to view factor tables. Your answer is correct. Discuss the nature of this lease for both the lessee and the lessor. This is a finance lease for Headland. This is a sales-type lease for Marin X Your answer is incorrect Calculate the amount of the annual rental payment required. (Round present value factor calculations to 5 decimal places, eg. 125124 and the final answer to 0 decimal places e.g. 58,972.) Annual rental payment $ 137064 e Textbook and Media List of Accounts X Your answer is incorrect. Compute the value of the lease liability to the lessee. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places eg. 58,972.) Present value of minimum lease payments $ 741418 Prepare the journal entries Headland would make in 2020 and 2021 related to the lease arrangement (cred account ties are automatically indented when amount is entered online menyren ered select "No entry for the macountities and enter for the amounts Round answers to Weimel plec cordura antries in the prefer prend the problemu Date Account Titles and explanation Debit Credit 11/20 Right-of Use Agget 2018 Lease Liability (To record the lease.) Lease Liability 107084 cash (To record lease payment.) 12/31/20 99488 Amortization Expense Right-of-Use Asset (To record amortization.) 58479 Interest Expense Lease Liability (To record interest.) 167084 11/21 Lease Llability Cash 90488 12/31/21 Amortization Expense Right-of-Use Asset (To record amortization.) interest Expense Lease ability (To record interest.) Prepare the journal entries Marin would make in 2020 and 2021 related to the lease arrangement. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required select "No Entry for the account titles and enter for the amounts. Round answers to o decimal places eg. 58,972. Record Journal entries in the order presented in the problem.) Debit Credi Date Account Titles and Explanation 1/1/20 V Lease Receivable cost of Goods Sold Sales Revenue Inventory (To record the lease.) 11 20 desh Lease Recevable UTILITATE (To record lease payment.) 12/31 20 Lease Recevable interest Revenue 1/1/20 Cash Lease Recevable 12/31/22 Lease Receivable interest Revenue Suppose Headland expects the residual value at the end of the lease term to be $35.000 but still guarantees a residual of $ 45.000. Compute the value of the lease liability at lease commencement. Lease liability $ 35000