On January 1, 2020, a machine was purchased for $403,000 by Metlock Leasing Co. The machine is expected to have a 10-year life with no salvage value. It is to be depreciated on a straight-line basis. The machine was leased to Ivanhoe Inc. for 3 years on January 1, 2020, with annual rent payments of $68,440 due at the beginning of each year, starting January 1, 2020. The machine is expected to have a residual value at the end of the lease term of $264,000, though this amount is unguaranteed. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a 1) Your answer is correct. What is the lease classification for the lessor? Operating lease e Textbook and Media List of Accounts Attempts: unlimited Attempts: UNUTILE (a2) Prepare the 2020 journal entries for the lessor. Date - Account Titles and Explanation Debit Credit c (To record purchase of machinery) (To record first lease payment) (To record lease revenue) (To record depreciation) (a3). How much should Metlock report as income before income tax on this lease for 2020? Income before income tax $ e Textbook and Media List of Accounts Attempts: unlimited Submit Answer Save for Later Record the journal entries Ivanhoe would record for 2020 on this lease, assuming its incremental borrowing rate is 6% and the rate implicit in the lease is unknown. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to O decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit (To record the lease) (To record lease payment) v Save for Later Attempts: unlimited Submit Answer (c). Suppose the lease was only for one year (only one payment of the same amount at commencement of the lease), with a renewal option at market rates at the end of the lease, and Ivanhoe elects to use the short-term lease exception. Record the journal entry Ivanhoe would record for 2020 on this lease. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit 1/1/20 e Textbook and Media List of Accounts