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On January 1 , Year 1 , Robin Corp. signs a contract to lease non - specialized manufacturing equipment from Owl, Inc. Robin agrees to

On January 1, Year 1, Robin Corp. signs a contract to lease non-specialized manufacturing equipment from Owl, Inc. Robin agrees to make lease payments of $36,000 per year. Additional information pertaining to the lease is as follows:
The term of the noncancelable lease is four years. Payments are due every December 31, beginning December 31, Year 1. Owl expects to collect all lease payments.
The fair value of the manufacturing equipment on January 1, Year 1, is $150,000. The equipment has an economic life of seven years.
The equipment has an estimated residual value of $15,000 at the end of the lease term. This amount is not guaranteed by Robin.
Both Robin and Owl depreciate similar assets using the straight-line method.
Robins incremental borrowing rate is 8% per year; Owls implicit interest rate is 6% and is known by Robin.
Robin pays $1,100 per year for maintenance of the equipment directly to an applicable third party.
Assume that this is an operating lease and prepare journal entries for Owl (the lessor) for the entire lease.
Round your answers to the nearest cent and use the rounded answer for the subsequent calculations.
Year 1
Jan. 1
Dec. 31
Dec. 31
Year 2
Dec. 31
Dec. 31
Year 3
Dec. 31
Dec. 31
Year 4
Dec. 31
Dec. 31

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