q 24)

Question 24 Marin Manufacturing Ltd. has signed a lease agreement with LPN Leasing Inc. to lease some specialized manufacturing equipment. The terms of the lease are as follows: . . The lease is for 5 years commencing January 1, 2020. Marin must pay LPN $58,515 on January 1 of each year, beginning in 2020. Equipment of this type normally has an economic life of 6 years. LPN has conduded, based on its review of Marin's financial statements, that there is no unusual credit risk in this situation. LPN will not incur any further costs with regard to this lease. LPN purchases this equipment directly from the manufacturer at a cost of $217,476, and normally sells the equipment for $271,276. Marin's borrowing rate is 7%. LPN's implied interest rate is 6%, which is known to Marin at the time of negotiating the lease. Marin uses the straight-line method to depreciate similar equipment. Both Marin and LPN have calendar fiscal years (year end December 31), and follow ASPE. . . Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. From Marin Manufacturing's perspective, is this a capital or operating lease? Marin will classify this as a Prepare a lease amortization schedule for this lease. (Round answers to o decimal places, e.g. 5,275.) Date Payment Interest Principal Balance January 1, 2020 January 1, 2020 January 1, 2021 January 1, 2022 January 1, 2023 January 1, 2024 SHOW LIST OF ACCOUNTS Prepare the journal entries on Marin Manufacturing's books on January 1, 2020. (Credit account titles are automatically indented when t is required, select "No entry" for the account titles and enter o for the amounts.) Account Titles and Explanation Debit Date Jan 1, 2020 Credit V (To record inception of lease.) v v (To record lease payment.) Prepare the journal entries for Marin Manufacturing on December 31, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter o for the amounts. Round answers to o decimal places, e.g. 5,125.) Date Account Titles and Explanation Dec. 31, 2020 Debit Credit (To record interest.) (To record depreciation expense.) SHOW LIST OF ACCOUNTS Prepare the journal entry on LPN Leasing's books on December 31, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter o for the amounts.) Debit Credit Date Account Titles and Explanation Dec. 31, 2020 (To record interest.)