On January 1, Ig Boy Equipment (Click the ic Future Value of 3 Present Value of Read the require equal to 2. It is proba 3. The lease 4. The Grou This is a(n) salesty The machine is not specialized for Ignite's business needs, has a sales price of $74,000, and its useful life is 7 years with no guaranteed residual value. The $16,000 annual rentals are due on January 1 of each year. The lease does not contain a transfer of ownership or a purchase option. Assume that there are no initial direct costs associated with this lease. There are also no nonlease components. HBE's implicit rate is not known to Ignite whose incremental borrowing rate is 10%. The carrying value of the equipment to HBE is $74,000, its fair value. Assume that collectability of all lease payments is reasonably assured. Ignite's fiscal year ends on December 31 Requirements a. Prepare the entries for the lessor, HBE for the first year of the lease Determine the implicit rate. (Assume that Happy Boy does not obtain a third-party guarantee of the residual value.) b. Would the accounting for the lessor change if a third party guarantees a residual value of $22 000 and collection of this amount is probable? Prepare the amortization tables needed (if any) to account for the lease using the part (b) assumptions. C. Communication s from Hap X rantee. Next On January 1, Ignite Sales Company entered into a lease agreement to lease a piece of machinery for a period of 5 years from Happy Boy Equipment (HBE). (Click the icon to view the details of the lease) Future Value of $1 table Future Value of an Ordinary Annuity table Future Value of an Annuity Que table Present Value of $1 table Present Value of an Ordinary Annuity table Present Value of an Annuity Que table Read the requirements Begin by preparing the entry that HBE will prepare on the lease commencement date, January 1. year 1 Prepare a compound entry to record the net investment in the lease and the removal of the asset from the books. (Record debits first, then credits. Exclude explanations from any journal entries.) Account January 1, Year 1 possible On January 1, Ignite Sales Company entered into a lease agreement to lease a piece of machinery for a period of 5 years from Happy Boy Equipment (HBE) (Click the icon to view the details of the lease.) Future Value of $1 table Future Value of an Ordinary Annuity table Future Value of an Annuity Due table Present Value of $1 table Present Value of an Ordinary Annuity table Present Value of an Annuity. Due table Read the requirements Prepare the entry that HBE will record on January 1, year 1 for the receipt of the first lease payment. (Record debits first, then credits Exclude explanations from any journal entries) Account January 1, Year 1 Mayt On January 1, Ignite Sales Company entered into a lease agreement to lease a piece of machinery for a period of 5 years from Happy Boy Equipment (HBE). (Click the icon to view the details of the lease.) Future Value of $1 table Future Value of an Ordinary Annuity table Future Value of an Annuity Due table Present Value of $1 table Present Value of an Ordinary Annuity table Present Value of an Annuity Due table Read the requirements Prepare the entry that HBE will record on December 31, year 1 to accrue interest on the lease. (For interest calculations, use interest rates rounded to four decimal places. XXXXX. Round your final answer to the nearest whole dollar. Record debits first, then credits Exclude explanations from any journal entries.) Account December 31, Year 1 On January 1, Ignite Sales Company entered into a lease agreement to lease a piece of machinery for a period of 5 years from Happy Boy Equipment (BE) (Click the icon to view the details of the lease.) Future Value of $1.table Future Value of an Ordinary Annuity table Euture Value of an Annuity. Due table Present Value of $1 table Present Value of an Ordinary Annuity table Present Value of an Annuity Due table Read the requirements ( Requirement c. Prepare the amortization tables needed (if any) to account for the lease using the part (b) assumptions (Complete all input fields Fir in arest calcula XXXXX and round your final answers to the nearest whole dollar Enter a "0" for any zero balances) Interest Date Payment Expense Reduction in Lease Liability Balance of Lease Liability Lease inception January 1, Year 1 January 1, Year 2 January 1 Year 3 On January 1, Ignite Sales Company entered into a lease agreement to lease a piece of machinery for a period of 5 years from Happy Boy Equipment (HSE) (Click the icon to view the details of the lease.) Future Value of $1 table Future Value of an Ordinary Annuity table Future Value of an Annuity Due table Present Value of $1 table Present Value of an Ordinary Annuity table Present Value of an Annuity Due table Read the requirements Puu Lan Date Payment Expense Lease Liability Lease Liability Lease inception January 1, Year 1 January 1, Year 2 January 1, Year 3 January 1 Year 4 January 1 Year 5 Residual value 4