Problem #1 (20 minutes, 25 points) Use the information below to answer the following questions related to lease accounting. Show your work to enable me to provide you with partial credit, and clearly label your answer. On January 1, 2019, the Smith Building Company (SBC) leased equipment with an economic life of 5 years from the Novak Equipment Company (NEC). The lease contains the following terms and provisions: The lease has a term of 4 years, and the equipment has an economic life of 5 years. The annual rental payment is $50,000, payable at the end of each year. The interest rate implicit in the lease is 10% and is known to SBC. The equipment has an unguaranteed residual value of $15,000. The fair value of the equipment is $168,738.45. The present value of the unguaranteed residual value is $10,245.20. Both SBC and NEC use the straight-line method to depreciate similar equipment. The present value factors are as follows (n is the number of periods): Table 3 "The Present Value of $1" 1 1 2 3 4 5 6 7 8096 0.925926 0.857339 0.793832 0.735030 0.680583 0.630170 0.583490 9.096 0.917431 0.841680 0.772183 0.708425 0.649931 0.596267 0.547034 10.0% 0.909091 0.826446 0.751315 0.683013 0.620921 0.564474 0.513158 12.06 0.892857 0.797194 0.711780 0.635518 0.567427 0.506631 0.452349 14.096 0.877193 0.769468 0.674972 0.592080 0.519369 0.455587 0.399637 Table 4 "The Present Value of an ordinary Annuity" 1 8.0% 0.925926 1.783265 9.09 0.917431 1.759111 10.0% 0.909091 1.735537 12.0% 0.892852 AAA 14.0% 0.877193 The present value factors are as follows in is the number of periodili Table 3 "The Present Value of $1" 1 2 09 7793 BON 0.935926 0857339 09132 07350 OSOS 0610120 OSA 120 . 000170 OSO 0772103 0.0023 0.54991 0.596267 0.54034 5 075135 058013 0.620921 0564474 031358 120 257 0.79714 071170 016355 0567627 0904611 0452149 03080 0655187 Table 4 "The Present Value of an ordinary Annuity" 1 2 3 4 5 6 7 8.00 0.925926 1.783265 2.572097 3.312127 3.992710 4.622880 5.206370 9.09 0.917431 1.759111 2.531295 3.239720 3.889651 4.485919 5.032953 10.06 0.909091 1.735537 2.486852 3.169865 3.790787 4.355261 4.868419 12.09 0.892857 1.690051 2.401831 3.037349 3.604776 4.111407 4.563757 14.0 0.877193 1.646661 2.321632 2.913712 3.43 1081 3.888668 4.258 305 Table 5 "The Present Value of an Annuity Due" 1 2 3 4 5 6 7 8.09 1.000000 1.925926 2.783265 3.577097 4.312127 4.992710 5.622880 9.09 1.000000 1.917431 2.759111 3.531295 4.239720 4.889651 5.485919 10.06 1.000000 1.909091 2.735537 3.486852 4.169865 4.790787 5.355261 12.046 1.000000 1.892857 2.690051 3.401831 4.037349 4.604776 5.111407 14.096 1.000000 1.877193 2.6-46661 3.321632 3.913712 4.433081 4.888668 Question 13 10 pts Using the space below, prepare the lease table for the Novak Equipment Company (the lesson) for January 1, 2019, and December 31, 2019/2020/2021/2022. Use the Insert table tool to help you input your answer. Edit View Insert Format Tools Table 12pt Paragraph BIU A Tv O words Question 14 8 pts Using the space below, prepare the accretion schedule for the unguaranteed residual asset for the Novak Equipment Company (the lessor) for January 1, 2019, and December 31. 2019/2020/2021/2022. Edit View Insert Format Tools Table 12ptParagraph BIU AT p Question 15 2pts Specifically, what type of leste is this for the Smith Building Company Edit View insert Format Tools Table 12pt Paragraph 2. The Owords D Question 16 2 pts What type of lease is this for the Novak Equioment Company Ek View Insert Format Tools Table 12pt Paragraph B I J K & T | 10 Question 17 3 pts I accretion is treated as interest income, how much total interest income will Novak Equipment Company recognize in 2019? Edit View insert Format Tools Table 12pt Paragraph BIUA 2 TV 1 O words