On January 2, 2020 Albert Aloysius Zander Equipment, Inc. (AAZEQ) and Mole Excavating entered into a 4 year lease contract for an IVAN-84D, which AAZEQ also offered for sale at $110,000. AAZEQ estimated that each machine could either be refurbished at the end of the lease or scrapped for parts, and that the residual value of the equipment would thus be $18,000. The economic life of the asset was six years. Mole Excavating incurred $4,400 in related direct costs for the lease. The lease required payments at the end of each year, commencing Dec 31, 2020. AAZEQ used a 4.7% discount rate and Moles Excavating IBR was 7.2%

Supply the amounts requested on the answer sheet. If the item description is not applicable to the facts of the problem, put NA in the box.

Implicit rate on the lease

Lease Receivable

Lesee Expense

LL

ROU

Deferred Gross Profit