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On January 1, 2020, Lavery Corp., which follows ASPE, leased equipment to Sunland Ltd., which follows IFRS 16. Both Lavery and Sunland have calendar year

On January 1, 2020, Lavery Corp., which follows ASPE, leased equipment to Sunland Ltd., which follows IFRS 16. Both Lavery and Sunland have calendar year ends. The following information concerns this lease.

1. The term of the non-cancellable lease is six years, with no renewal option. The equipment reverts to the lessor at the termination of the lease, at which time it is expected to have a residual value (not guaranteed) of $6,600. Sunland Ltd. depreciates all its equipment on a straight-line basis.

2. Equal rental payments are due on January 1 of each year, beginning in 2020.

3. The equipments fair value on January 1, 2020, is $145,000 and its cost to Lavery is $111,000.

4. The equipment has an economic life of seven years.

5. Lavery set the annual rental to ensure a 11% rate of return. Sunlands incremental borrowing rate is 12% and the lessors implicit rate is unknown to the lessee.

6. Collectibility of lease payments is reasonably predictable and there are no important uncertainties about any unreimbursable costs that have not yet been incurred by the lessor.

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

Using time value of money tables, a financial calculator, or Excel spreadsheet functions, calculate the amount of the annual rental payment. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 5,275.)

Annual rental payment $enter the Annual rental payment in dollars

Prepare all necessary journal entries and adjusting entries for Sunland for 2020. (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. Record journal entries in the order presented in the problem. Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275.)

Date

Account Titles and Explanation

Debit

Credit

choose a transaction date
enter an account title to record inception and payment of lease
enter a debit amount
enter a credit amount

enter an account title to record inception and payment of lease
enter a debit amount
enter a credit amount

enter an account title to record inception and payment of lease
enter a debit amount
enter a credit amount

(To record inception and payment of lease.)

choose a transaction date
enter an account title to record depreciation expense
enter a debit amount
enter a credit amount

enter an account title to record depreciation expense
enter a debit amount
enter a credit amount

(To record depreciation expense.)

choose a transaction date
enter an account title to record interest
enter a debit amount
enter a credit amount

enter an account title to record interest
enter a debit amount
enter a credit amount

(To record interest.)

Prepare all necessary journal entries and adjusting entries for Lavery for 2020. (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. Record journal entries in the order presented in the problem. Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275.)

Date

Account Titles and Explanation

Debit

Credit

1/1/20
enter an account title to record inception of lease and cost of goods sold
enter a debit amount
enter a credit amount

enter an account title to record inception of lease and cost of goods sold
enter a debit amount
enter a credit amount

enter an account title to record inception of lease and cost of goods sold
enter a debit amount
enter a credit amount

enter an account title to record inception of lease and cost of goods sold
enter a debit amount
enter a credit amount

enter an account title to record inception of lease and cost of goods sold
enter a debit amount
enter a credit amount

(To record inception of lease and cost of goods sold.)

choose a transaction date
enter an account title to record the collection of lease payment
enter a debit amount
enter a credit amount

enter an account title to record the collection of lease payment
enter a debit amount
enter a credit amount

(Collection of lease payment.)

choose a transaction date
enter an account title to record interest
enter a debit amount
enter a credit amount

enter an account title to record interest
enter a debit amount
enter a credit amount

(To record interest.)

TABLE PV.1 Present Value of 1 (n) periods 2% 24% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 15% 0.98039 0.97561 0.97087 0.96156 0.95238 0.94340 0.93458 0.92593 0.91743 0.90909090090 0.89286 0.86957 0.96117 0.95181 0.94260 0.92456 0.90703 0.89000 0.87344 0.85734 0.84168 0.82645 0.81162 0.79719 0.75614 0.94232 0.92860 0.91514 0.88900 0.86384 0.83962 0.81630 0.79383 0.77218 0.75132 0.73119 0.71178 0.65752 0.92385 0.90595 0.88849 0.85480 0.82270 0.79209 0.76290 0.73503 0.70843 0.68301 0.65873 0.63552 0.57175 0.90583 0.88385 0.86261 0.82193 0.78353 0.74726 0.71299 0.68058 0.64993 0.62092 0.59345 0.56743 0.49718 0.88797 0.86230 0.83748 0.79031 0.74622 0.70496 0.66634 0.63017 0.59627 0.56447 0.53464 0.50663 0.43233 0.87056 0.84127 0.81309 0.75992 0.71068 0.66506 0.62275 0.58349 0.54703 0.51316 0.48166 0.45235 0.37594 0.85349 0.82075 0.78941 0.73069 0.67684 0.62741 0.58201 0.54027 0.50187 0.46651 0.43393 0.40388 0.32690 0.83676 0.80073 0.76642 0.70259 0.64461 0.59190 0.54393 0.50025 0.46043 0.42410 0.39092 0.36061 0.28426 0.82035 0.78120 0.74409 0.67556 0.61391 0.55839 0.50835 0.46319 0.42241 0.38554 0.35218 0.32197 0.24719 0.80426 0.76214 0.72242 0.64958 0.58468 0.52679 0.47509 0.42888 0.38753 0.35049 0.31728 0.28748 0.21494 0.78849 0.74356 0.70138 0.62460 0.55684 0.49697 0.44401 0.39711 0.35554 0.31863 0.28584 0.25668 0.18691 0.77303 0.72542 0.68095 0.60057 0.53032 0.46884 0.41496 0.36770 0.32618 0.28966 0.25751 0.22917 0.16253 0.75788 0.70773 0.66112 0.57748 0.50507 0.44230 0.38782 0.34046 0.29925 0.26333 0.23199 0.20462 0.14133 0.74301 0.69047 0.64186 0.55526 0.48102 0.41727 0.36245 0.31524 0.27454 0.23939 0.20900 0.18270 0.12289 0.72845 0.67362 0.62317 0.53391 0.45811 0.39365 0.33873 0.29189 0.25187 0.21763 0.18829 0.16312 0.10687 0.71416 0.65720 0.60502 0.51337 0.43630 0.37136 0.31657 0.27027 0.23107 0.19785 0.16963 0.14564 0.09293 0.70016 0.64117 0.58739 0.49363 0.41552 0.35034 0.29586 0.25025 0.21199 0.17986 0.15282 0.13004 0.08081 0.68643 0.62553 0.57029 0.47464 0.39573 0.33051 0.27651 0.23171 0.19449 0.16351 0.13768 0.11611 0.07027 0.67297 0.61027 0.55368 0.45639 0.37689 0.31180 0.25842 0.21455 0.17843 0.14864 0.12403 0.10367 0.06110 13 15 16 18 20 TABLE PV.2 Present Value of an Annuity of 1 PV = 1 - dat (n) Periods 2% 0.98039 2 1.94156 2.88388 3.80773 4.71346 5.60143 6.47199 7.32548 8.16224 8.98259 11 9 .78685 12 10.57534 11.34837 12.10625 12.84926 13.57771 14.29187 14.99203 19 1 5.67846 16.35143 24% 3% 0.97561 0.97087 1.92742 1.91347 2.85602 2.82861 3.76197 3.71710 4.64583 4.57971 5.50813 5.41719 6.349396.23028 7.170147.01969 7970877.78611 8.75206 8.53020 9.51421 9.25262 10.25776 9.95400 10.98319 10.63496 11.69091 11.29607 12.38138 11.93794 13.05500 12.56110 13.71220 13.16612 14.35336 13.75351 14.97889 14.32380 15.58916 14.87747 4% 5% 6% 7% 8% 9% 10% 11% 12% 15% 0.96154 0.95238 0.94340 0.93458 0.92593 0.91743 0.90909090090 0.89286 0.86957 1.88609 1.85941 1.83339 1.80802 1.78326 1.75911 1.73554 1.71252 1.69005 1.62571 2.775092.72325 2.67301 2.62432 2.57710 2.53130 2.48685 2.44371 2.40183 2.28323 3.62990 3.54595 3.46511 3.38721 3.31213 3.23972 3.16986 3.10245 3.03735 2.85498 4.45182 4.32948 4.21236 4.10020 3.99271 3.88965 3.79079 3.69590 3.60478 3.35216 5.24214 5.075694.91732 4.76654 4.62288 4.48592 4.35526 4.23054 4.11141 3.78448 0.00205 5.78637 5.58238 5.38929 5.20637 5.03295 4.86842 4.71220 4.56376 4.16042 6.73274 6.46321 6.20979 5.97130 5.74664 5.53482 5.33493 5.14612 4.96764 4.48732 7.435337.10782 6.801696.51523 6.24689 5.99525 5.75902 5.53705 5.32825 4.77158 8.11090 7.72173 7.36009 7.02358 6.71008 6.41766 6.14457 5.88923 5.650225.01877 8.76048 8.30641 7.886877.49867 7.13896 6.80519 6.49506 6.20652 5.93770 5.23371 9.38507 8.863258.38384 7.94269 7.53608 7.16073 6.81369 6.49236 6.19437 5.42062 9.98565 9.39357 8.85268 8.35765 7.90378 7.48690 7.10336 6.74987 6.42355 5.58315 10.56312 9.89864 9.294988.74547 8.24424 7.78615 7.36669 6.98187 6.62817 5.72448 11.11839 10.37966 9.71225 9.10791 8.55948 8.06069 7.60608 7.19087 6.81086 5.84737 11.65230 10.83777 10.105909.44665 8.85137 8.31256 7.82371 7.37916 6.97399 5.95424 12.16567 11.27407 10.47726 9.76322 9.12164 8.54363 8.02155 7.54879 7.11963 6.04716 12.65930 11.68959 10.82760 10.05909 9.37189 8.75563 8.20141 7.701627.24967 6.12797 13.13394 12.08532 11.15812 10.33560 9.60360 8.95012 8.36492 7.839297.36578 6.19823 13.59033 12.46221 11.46992 10.59401 9.81815 9.12856 8.51356 7.96333 7.46944 6.25933 TABLE PV.1 Present Value of 1 (n) periods 2% 24% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 15% 0.98039 0.97561 0.97087 0.96156 0.95238 0.94340 0.93458 0.92593 0.91743 0.90909090090 0.89286 0.86957 0.96117 0.95181 0.94260 0.92456 0.90703 0.89000 0.87344 0.85734 0.84168 0.82645 0.81162 0.79719 0.75614 0.94232 0.92860 0.91514 0.88900 0.86384 0.83962 0.81630 0.79383 0.77218 0.75132 0.73119 0.71178 0.65752 0.92385 0.90595 0.88849 0.85480 0.82270 0.79209 0.76290 0.73503 0.70843 0.68301 0.65873 0.63552 0.57175 0.90583 0.88385 0.86261 0.82193 0.78353 0.74726 0.71299 0.68058 0.64993 0.62092 0.59345 0.56743 0.49718 0.88797 0.86230 0.83748 0.79031 0.74622 0.70496 0.66634 0.63017 0.59627 0.56447 0.53464 0.50663 0.43233 0.87056 0.84127 0.81309 0.75992 0.71068 0.66506 0.62275 0.58349 0.54703 0.51316 0.48166 0.45235 0.37594 0.85349 0.82075 0.78941 0.73069 0.67684 0.62741 0.58201 0.54027 0.50187 0.46651 0.43393 0.40388 0.32690 0.83676 0.80073 0.76642 0.70259 0.64461 0.59190 0.54393 0.50025 0.46043 0.42410 0.39092 0.36061 0.28426 0.82035 0.78120 0.74409 0.67556 0.61391 0.55839 0.50835 0.46319 0.42241 0.38554 0.35218 0.32197 0.24719 0.80426 0.76214 0.72242 0.64958 0.58468 0.52679 0.47509 0.42888 0.38753 0.35049 0.31728 0.28748 0.21494 0.78849 0.74356 0.70138 0.62460 0.55684 0.49697 0.44401 0.39711 0.35554 0.31863 0.28584 0.25668 0.18691 0.77303 0.72542 0.68095 0.60057 0.53032 0.46884 0.41496 0.36770 0.32618 0.28966 0.25751 0.22917 0.16253 0.75788 0.70773 0.66112 0.57748 0.50507 0.44230 0.38782 0.34046 0.29925 0.26333 0.23199 0.20462 0.14133 0.74301 0.69047 0.64186 0.55526 0.48102 0.41727 0.36245 0.31524 0.27454 0.23939 0.20900 0.18270 0.12289 0.72845 0.67362 0.62317 0.53391 0.45811 0.39365 0.33873 0.29189 0.25187 0.21763 0.18829 0.16312 0.10687 0.71416 0.65720 0.60502 0.51337 0.43630 0.37136 0.31657 0.27027 0.23107 0.19785 0.16963 0.14564 0.09293 0.70016 0.64117 0.58739 0.49363 0.41552 0.35034 0.29586 0.25025 0.21199 0.17986 0.15282 0.13004 0.08081 0.68643 0.62553 0.57029 0.47464 0.39573 0.33051 0.27651 0.23171 0.19449 0.16351 0.13768 0.11611 0.07027 0.67297 0.61027 0.55368 0.45639 0.37689 0.31180 0.25842 0.21455 0.17843 0.14864 0.12403 0.10367 0.06110 13 15 16 18 20 TABLE PV.2 Present Value of an Annuity of 1 PV = 1 - dat (n) Periods 2% 0.98039 2 1.94156 2.88388 3.80773 4.71346 5.60143 6.47199 7.32548 8.16224 8.98259 11 9 .78685 12 10.57534 11.34837 12.10625 12.84926 13.57771 14.29187 14.99203 19 1 5.67846 16.35143 24% 3% 0.97561 0.97087 1.92742 1.91347 2.85602 2.82861 3.76197 3.71710 4.64583 4.57971 5.50813 5.41719 6.349396.23028 7.170147.01969 7970877.78611 8.75206 8.53020 9.51421 9.25262 10.25776 9.95400 10.98319 10.63496 11.69091 11.29607 12.38138 11.93794 13.05500 12.56110 13.71220 13.16612 14.35336 13.75351 14.97889 14.32380 15.58916 14.87747 4% 5% 6% 7% 8% 9% 10% 11% 12% 15% 0.96154 0.95238 0.94340 0.93458 0.92593 0.91743 0.90909090090 0.89286 0.86957 1.88609 1.85941 1.83339 1.80802 1.78326 1.75911 1.73554 1.71252 1.69005 1.62571 2.775092.72325 2.67301 2.62432 2.57710 2.53130 2.48685 2.44371 2.40183 2.28323 3.62990 3.54595 3.46511 3.38721 3.31213 3.23972 3.16986 3.10245 3.03735 2.85498 4.45182 4.32948 4.21236 4.10020 3.99271 3.88965 3.79079 3.69590 3.60478 3.35216 5.24214 5.075694.91732 4.76654 4.62288 4.48592 4.35526 4.23054 4.11141 3.78448 0.00205 5.78637 5.58238 5.38929 5.20637 5.03295 4.86842 4.71220 4.56376 4.16042 6.73274 6.46321 6.20979 5.97130 5.74664 5.53482 5.33493 5.14612 4.96764 4.48732 7.435337.10782 6.801696.51523 6.24689 5.99525 5.75902 5.53705 5.32825 4.77158 8.11090 7.72173 7.36009 7.02358 6.71008 6.41766 6.14457 5.88923 5.650225.01877 8.76048 8.30641 7.886877.49867 7.13896 6.80519 6.49506 6.20652 5.93770 5.23371 9.38507 8.863258.38384 7.94269 7.53608 7.16073 6.81369 6.49236 6.19437 5.42062 9.98565 9.39357 8.85268 8.35765 7.90378 7.48690 7.10336 6.74987 6.42355 5.58315 10.56312 9.89864 9.294988.74547 8.24424 7.78615 7.36669 6.98187 6.62817 5.72448 11.11839 10.37966 9.71225 9.10791 8.55948 8.06069 7.60608 7.19087 6.81086 5.84737 11.65230 10.83777 10.105909.44665 8.85137 8.31256 7.82371 7.37916 6.97399 5.95424 12.16567 11.27407 10.47726 9.76322 9.12164 8.54363 8.02155 7.54879 7.11963 6.04716 12.65930 11.68959 10.82760 10.05909 9.37189 8.75563 8.20141 7.701627.24967 6.12797 13.13394 12.08532 11.15812 10.33560 9.60360 8.95012 8.36492 7.839297.36578 6.19823 13.59033 12.46221 11.46992 10.59401 9.81815 9.12856 8.51356 7.96333 7.46944 6.25933

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