Question 10 of 10 > -/1 View Policies Current Attempt in Progress 1. Oakridge Leasing Corporation signs an agreement on January 1, 2020, to lease equipment to Blossom Limited. Oakridge and Blossom follow ASPE. The following information relates to the agreement The term of the non-cancellable lease is five years, with no renewal option. The equipment has an estimated economic life of six years. 2. The asset's fair value at January 1, 2020, is $85,000. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $6,200, which is guaranteed. Blossom Limited assumes direct responsibility for all executory costs, which include the following annual amounts: $910 to Rocky Mountain Insurance Ltd. for insurance and $1,610 to James Township for property taxes. The agreement requires equal annual rental payments of $20,182 to Oakridge, the lessor, beginning on January 1, 2020. 6. The lessee's incremental borrowing rate is 13%. The lessor's implicit rate is 12% and is known to the lessee. 7. Blossom Limited uses the straight-line depreciation method for all equipment. Blossom uses reversing entries when appropriate. 3 5. 8. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE Question 10 of 10 -11 Unguar Guaranteed Residual Value Debit Credit Account Titles and Explanation Capitalization of lease 1/1/20: End of year 31/12/20: (To record interest expense.) (To record depreciation.) eTextbook and Media List of Accounts Save for Later Attempts: unlimited Submit Answer TE we A - # 3 S 4 % 5 6 & 7 8 0 W E R T Y U I 0 Question 10 of 10 > -/1 Guaranteed Residual Value Debit Unguaranteed Residual Value Debit Credit Credit e Textbook and Media List of Accounts Question 10 of 10 > -/1 View Policies Current Attempt in Progress 1. Oakridge Leasing Corporation signs an agreement on January 1, 2020, to lease equipment to Blossom Limited. Oakridge and Blossom follow ASPE. The following information relates to the agreement The term of the non-cancellable lease is five years, with no renewal option. The equipment has an estimated economic life of six years. 2. The asset's fair value at January 1, 2020, is $85,000. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $6,200, which is guaranteed. Blossom Limited assumes direct responsibility for all executory costs, which include the following annual amounts: $910 to Rocky Mountain Insurance Ltd. for insurance and $1,610 to James Township for property taxes. The agreement requires equal annual rental payments of $20,182 to Oakridge, the lessor, beginning on January 1, 2020. 6. The lessee's incremental borrowing rate is 13%. The lessor's implicit rate is 12% and is known to the lessee. 7. Blossom Limited uses the straight-line depreciation method for all equipment. Blossom uses reversing entries when appropriate. 3 5. 8. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE Question 10 of 10 -11 Unguar Guaranteed Residual Value Debit Credit Account Titles and Explanation Capitalization of lease 1/1/20: End of year 31/12/20: (To record interest expense.) (To record depreciation.) eTextbook and Media List of Accounts Save for Later Attempts: unlimited Submit Answer TE we A - # 3 S 4 % 5 6 & 7 8 0 W E R T Y U I 0 Question 10 of 10 > -/1 Guaranteed Residual Value Debit Unguaranteed Residual Value Debit Credit Credit e Textbook and Media List of Accounts