Problem 21A-6 b-f Bramble Leasing Company agrees to lease equipment to Sunland Corporation on January 1, 2017, The following information relates to the e of the lease Is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years, 2. The cost of the machinery is $517,000, and the fair value of the asset on January 1, 2017, is $652,00o 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $98,000. Su land estimates that the expected residual value at the end of the lease term will be 98,000. Sunland amortizes all of 4. The lease agreement requires equal annual rental payments, beginning on January 1, 2017 5. The collectibility of the lease payments is probable. 6. Bramble desires a 10% rate of return on its investments. Sunland s incremental borrow ng rate is 1 tag and the essor s impist rite sunki Assume the accounting period ends on December 31.) X] Your answer is incorrect. Try again Calculate the amount of the annual rental payment required. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O decimal places e.g. 58,972) Annual rental payment SHOW LIST OF ACCOUNTS LINK TO TEXT I NK TO TEXT Your answer is incorrect. Try again. Compute the value of the Present value of minimum lease payments e lease liability to the lessee. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O decimal places e.q. 58,972.) SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT It is entered. Do not indent manually, Il no entry is regaire 3 Your answer is partially correct. Try again. 21 I entries Sunland would make in 2017 and 2018 related to the lease arrangement. ( select "No Entry" for the account titles and enter o for the amounts (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, Round answers to 0 decimal plaxces e.g. 58,972.) Date Account Titles and Explanation Debit Credit Right of Use Asset 12a 21 ad Lease Liability (To record the lease.) Lease Liability e by (To record lease payment.) 12/31/17 nterest Expense Ot Interest Payable To record amortization,) Depreciation Expense Accumulated Depreciation Capital Leases To record interest) Lease Liability Cash 12/31/18Depreciation Expense Accumulated Depreciation-Capital Leases (To recoerd amortization.) Interest Expense Interest Payable 38 PM 2/4/2018 (To record interest.) Your answer is partially correct. Try again. Prepar 8 related to the lease arrangement. (Credit account titles are automatically indented when amount is entered. De not indent mansally. B select "No Entry, for the account titles and enter 0 for the amounts Round answers to 0 deennal places e-950i) e the journal entries Bramble would make in 2017 and 20 Date Account Titles and Explanation 8-5 Debit Credit Cost of Goods Sold 2.s Sales Revenue Inventory (To record the lease.) Interest Revenue (To record lease payment 12/31/17 Interest Receivable Interest Revenue Cash Interest Receivable 12/31/18 erest Interest Revenue LINK TO TEXT LINK TO TEXT 39 PM YouP answer is Incorrect. Try again. residual value at the end of the lease term to be $88,000 but still guarantees a residual of $98,000. Compute the value of the lease liability at lease commencement. Lease liability Click if you would like to Show Work for this question: Open Show Work SHOW LIST OF ACCOUNTS