PROBLEM 111 Dumont Corporation, a lessor of office machines December 3 ,2002, which was delivered the same day to Finley Company, purchased a new machine for $600,000 on the lessee. The following information relating to the lease transaction is available: . The leased asset has an estimated useful life of six years The lease term is five years. t the end of the lease term, the machine will revert to Dumont, at which time it is expected to have a residual value of $70,000 (none of which is guaranteed by Finely) Dumont's implicit interest rate is 1 196, which is known by Finley. Finley's incremental borrowing rate is 15% at December31 2002. Lease rental consists of seven equal annual payments , the first of which was paid on December 31, 2002 . . . Decem bertal consitsoog aach is Both lessor and lessee are calendar -year corporations and depreciate all fixed assets on the straight-line basis. " Information on the present value factors is as follows: 0.497 Present value of $1 for five periods at 15% Present value of $1 for five periods at 1 1% Present value ofan annuity due of 1 for five periods at l 1%-................4 0593 . 3.854 Present value of an annuity due of 1 for five periods at 15% Required: 1) Compute the annual rental under the lease. 2) Calculate the expense that the lessee recorded for the year ended December 31,2003. 3) Prepare all the journal entries on the book of lessee for the years ending December 31, 2002 and December 31, 2003. 4) Determine Gross investment for the lessor