Problem 21A-6 b-f (Part Level Submission) Nash Leasing Company agrees to lease equipment to Crane Corporation on January 1, 2017. The following information relates to the lease agreement. 1. The term 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 $657,000 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $98,000. Crane estimates that the expected residual value at the end of the lease term will be 98,000. Crane amortizes all of its leased equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on January 1, 2017. 5. The collectibility of the lease payments is probable 6. Nash desires a 10% rate of return on its investments. Crane's incremental borrowing rate is 11%, and the lessor's implicit rate is unknown. (Assume the accounting period ends on December 31.) Click here to view factor tables Your answer is correct. 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 0 decimal places e g 58,972. Annual rental payment $113292.4116 Attempts: 2 of 5 used Your answer is correct. Compute the value of the 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.g. 58,972.) Present value of minimum lease payments s59257 Attempts: 4 of 5 used Your answer is correct. Prepare the journal entries Crane would make in 2017 and 2018 related to the lease arrangement. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places e.g. 58,972.) Date Account Titles and Explanation Debit Credit ht-of-Use 592578 ease Liabili 92578 (To record the lease.) ease Liabili 13292 as (To record lease payment.) 2/31/17 Amortization Ex 4654 ht-of-Use (To record amortization.) nterest Ex 2721 $2721 ease Liabili (To record interest.) ease Liabili 1329 113292 12/31/18 mortization Ex 4654 ht-of-Use Asse (To record amortization.) nterest Ex 6059 6059 ease Liabil (To record interest.) Your answer is partially correct. Try again. Prepare the journal entries Nash would make in 2017 and 2018 related to the lease arrangement. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places e.g. 58,972.) Date Account Titles and Explanation Debit Credit 1/1/17Right-of-Use Asset Lease Liability Lease Liability Cash (To record the lease.) Lease Liability Cash (To record lease payment.) 2/31/17| Interest Expense Right-of-Use Asset 1/1 Lease Liability Cash 2/31/18 Amortization Expense Cash
