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On December 31, 2021, Rhone-Metro industries leased equipment to Western Soya. Co. for a fouf-year period ending December 31 , 2025, at which time possession

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On December 31, 2021, Rhone-Metro industries leased equipment to Western Soya. Co. for a fouf-year period ending December 31 , 2025, at which time possession of the leased asset will revert back to Rhone-Metro. The equipment cost Rhone-Metro $672,747 and has an expected useful life of six years. Its normal sales price is $672,747, The lessee guaranteed residual value at December 31, 2025, is \$15,000: Equal payments under the lease are $190.000 and are due on December 31 of each year. The first payment was made on December 31,2021 . Western Soya's incremental borrowing rate is 12%. Western Soya knows the interest rate implicit in the Tease psyments is 10%. Both companies use straight-line depreciation. Use (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and YAD Of S1) (Use appropriate factor(s) from the tables provided.) Required: 1. Show how Rhone-Metro calculated the 5190,000 annual lease payments. 2. How should this lease be ciassifed (a) by Wertem Soya Co. (the lessee) and (b) by Rhone-Metro industries (the lessor)? 3. Prepare the appropriate entries for both Western 50yaCo and Rhone-Metro on December 31,2021. 4. Prepare an anorization schedule(s) describing the pattern of interest over the lease term for the lessee and the lessor. 5. Prepare all appropriate entries for both Western Soya and Rhone-Meto on December 31,2022 (the second lease payment and amortizationk 6. Piepare the appropriate entries for both Westem Soya and Rhone-Metro on December 31,2025 assuming the equipment is returned to Rhone-Metro and the actual residual value on that date is $2,000. Complete this question by entering your answers in the tabs below. Show her thone-Metro calculated the $190,000 annual lease payments

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