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Phelps Company lemes a building to Wahh, inc on January 1.2025. The following facts pertain to the lease agreement. 1. The iease termis 5 years,

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Phelps Company lemes a building to Wahh, inc on January 1.2025. The following facts pertain to the lease agreement. 1. The iease termis 5 years, with equal annual rental payments of $4,703 at the beginning of each year. 2. Omnership does not trander st the end of the lease term, there is no bargain purchase option, and the asset is not of a speclalized ruture. 3. The bulding has a fair value of $23,000, a book value to Phelps of $16,000, and a useful lite of 6 woars. 4. At the end of the lease term, Phelps and Walsh expect there to be an unguaranteed residual value of $4,000. 5. Phelps wants to eam a return of 8x on thelease, and collectibilityo the payments is probable. Walsh was unaware of the implicit rate used in the lease by Phelps and has an incremental bo Clickhere to view tactor tables. How would Phetps fessor) and Walih (lessec) classity thislease? Phelps would cissify the lease as a lease Waht wold dinsify the lease as a lexe. provided and round froil annwers to 0 decimal ploces es. 5.275.)

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