Question 10 of 10 -/1 View Policies Current Attempt in Progress Oakridge Leasing Corporation signs an agreement on January 1, 2020, to lease equipment to Sunland Limited. Oakridge and Sunland follow ASPE. The following information relates to the agreement. 1. 2. . 4. The term of the non-cancellable lease is five years, with no renewal option. The equipment has an estimated economic life of six years. 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 $6,800, which is guaranteed. Sunland 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 $19,006 to Oakridge, the lessor, beginning on January 1, 2020. The lessee's incremental borrowing rate is 10%. The lessor's implicit rate is 9% and is known to the lessee. Sunland Limited uses the straight-line depreciation method for all equipment. Sunland uses reversing entries when appropriate. 5. 6. 7. 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. Calculate the PV of the future minimum lease payments using any of the following methods: (1) factor tables, (2) a financial calculator, or (3) Excel functions. (Round factor values to 5 decimal places, eg. 1.25124 and final answers to decimal places, eg. 1,452.) Present Value $ e Textbook and Media List of Accounts Prepare an amortization schedule for Sunland Limited for the lease term. Use Excel. (Hint: You may find the ROUND formula helpful for rounding in Excel.) (Round factor values to 5 decimal places, eg. 1.25124 and final answers to decimal places, e.g. 1,452.) Sunland Limited (Lessee) Lease Amortization Schedule Annual Lease Date Payment 1/1/20 Interest on Unpaid Obligation Reduction of Lease Obligation Balance of Lease Obligation $ 1/1/20 1/1/21 1/1/21 1/1/22 1/1/23 1/1/24 1/1/25 $ $ $ e Textbook and Media List of Accounts Prepare all of Sunland's journal entries for 2020 to record the lease agreement and the lease payments. LeBlanc's accounting period ends on December 31. Ignore payments of insurance and property taxes. (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 for the amounts. Round answers to decimal places, eg. 5,275.) Date Account Titles and Explanation Debit Credit 1/1/20 (To record inception of lease and first lease payment.) 12/31/20 (To record interest.) (To record depreciation expense.) e Textbook and Media List of Accounts Prepare a schedule contrasting the journal entries prepared in part (c) with those using an unguaranteed residual value of $6,800. Ignore payments of insurance and property taxes. (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 for the amounts. Round answers to decimal places, eg. 5,275.) Guaranteed Residual Value Unguaran Account Titles and Explanation Debit Credit 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 Table A.5 PRESENT VALUE OF AN ANNUITY DUE OF 1 1 PVF-AD-1+ (n) periods 1 2 3 4 5 6 7 8 9 10 2% 242% 3% 5% 6% 8% 9% 10% 12% 15% 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.98039 1.97561 1.97087 1.96154 1.95238 1.94340 1.92593 1.91743 1.90909 1.900901.89286 1.86957 2.94156 2.92742 2.91347 2.88609 2.85941 283339 2.78326 2.75911 2.73554 2.71252 2.69005 2.62571 3.88388 3.85602 3.82861 3.77509 3.72325 3.67301 3.57710 3.53130 3.48685 3.44371 3.40183 3.28323 4.80773 4.76197 4.71710 4.62990 4.54595 4.46511 4.312134.23972 4.16986 4.10245 4.03735 3.85498 5.71346 5.64583 5.57971 5.45182 5.32948 5.21236 4.99271 4.88965 4.79079 4.69590 4.60478 4.35216 6.60143 6.50813 6.41719 6.24214 6.07569 5.91732 5.62288 5.48592 5.35526 5.23054 5.11141 4.78448 7.47199 7.34939 7.23028 7.00205 6.78637 6.58238 6.20637 6.03295 5.86842 5.71220 5.56376 5.16042 8.32548 8.17014 8.01969 7.73274 7.46321 7.20979 6.74664 6.53482 6.33493 6.14612 5.96764 5.48732 9.16224 8.97097 8.78611 8.43533 8.10782 7.80169 7.24689 6.99525 6.75902 6.53705 6.32825 5.77158 9.98259 9.75206 9.53020 9.11090 8.72173 8.360097.71008 7.41766 7.14457 6.88923 6.65022 6.01877 10.78685 10.51421 10.25262 9.76048 9.30641 8.88687 8.13896 7.80519 7.49506 7.20652 6.93770 6.23371 11.57534 11.25776 10.95400 10.38507 9.86325 9.38384 8.53608 8.16073 7.81369 7.49236 7.19437 6.42062 12.34837 11.98319 11.63496 10.98565 10.39357 9.85268 8.90378 8.48690 8.10336 7.74987 7.42355 6.58315 13.10625 12.69091 12 29607 11.56312 10.89864 10.29498 9.24424 8.78615 9.36669 7.98187 7.62817 6.72448 13.84926 13.38138 12.93794 12.11839 11.37966 10.71225 9.55948 9.06069 8.60608 8.19087 7.81086 6.84737 14.57771 14.05500 13.56110 12.65230 11.83777 11.10590 9.85137 9.31256 8.82371 8.37916 7.97399 6.95424 15.29187 14.71220 14.16612 13.16567 12.27407 11.47726 10.12164 9.54363 9.02155 8.54879 8.11963 7.04716 15.99203 15.35336 14.75351 13.65930 12.68959 11.82760 10.37189 9.75563 9.20141 8.70162 8.24967 7.12797 16.67846 15.97899 15.32380 14.13394 13.08532 12.15812 10.60360 9.95012 9.36492 8.83929 8.36578 7.19823 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 17.35143 16.58916 15.87747 14.59033 13.46221 12.46992 10.81815 10.12855 9.51356 8.96333 8.46944 7.25933 18.0112117.18455 16.41502 15.02916 13.82115 12.76408 11.01680 10.29224 9.64869 9.07507 8.56200 7.31246 18.65805 17.76541 16.93692 15.45112 14.16300 13.04158 11.20074 10.44243 9.771549.17574 8.64465 7.35866 19.29220 18.33211 17.44361 15.85684 14.48857 13.30338 11.37106 10.58021 9.88322 9.26643 8.71843 7.39884 19.91393 18.88499 17.93554 16.24696 14.79864 13.55036 11.52876 10.70661 9.98474 9.34814 8.78432 7.43377 20.52346 19.42438 18.41315 16.62208 15.09394 13.78336 11.67478 10.82258 10.07704 9.42174 8.84314 7.46415 21.12104 19.95061 18.87684 16.98277 15.37519 14.00317 11.80998 10.92897 10.16095 9.48806 8.89566 7.49056 21.70690 20.46401 19.32703 17.32959 15.64303 14.21053 11.93518 11.02658 10.23722 9.54780 8.94255 7.51353 22.28127 20.96489 19.76411 17.66306 15.89813 14.40616 12.05108 11.11613 10.30657 9.60162 8.98442 7.53351 22.84438 21.45355 20.18845 17.98371 16.14107 14.59072 12.15841 11.19828 10.36961 9.65011 9.02181 7.55088 26 27 28 29 30 31 32 33 34 35 23.39646 21.93029 20.60044 18.29203 16.37245 14.76483 12.25778 11.27365 10.42691 9.69379 9.05518 7.56598 23.93770 22.39541 21.00043 18.58849 16.59281 14.92909 12.34980 11.34280 10.47901 9.73315 9.08499 7.57911 24.46833 22.84918 21.38877 18.87355 16.80268 15.08404 12.43500 11.40624 10.52638 9.76860 9.11159 7.59053 24.98856 23.29188 21.76579 19.14765 17.00255 15.23023 12.51389 11.46444 10.56943 9.80054 9.13535 7.60046 25.49859 23.72379 22.13184 19.41120 17.19290 15.36814 12.58693 11.51784 10.60858 9.82932 9.15656 7.60910 36 37 38 39 40 25.99862 24.14516 22.48722 19.66461 17.37419 15.49825 12.65457 11.56682 10.64416 9.85524 9.17550 7.61661 26.48884 24.55625 22.83225 19.90828 17.54685 15.62099 12.71719 11.61176 10.67651 9.87859 9.19241 7.62314 26.96945 24.95732 23.16724 20.14258 17.71129 15.73678 12.77518 11.65299 10.70592 9.89963 9.20751 7.62882 27.44064 25.34860 23.49246 20.36786 17.86789 15.84602 12.82887 11.69082 10.73265 9.91859 9.22099 7.63375 27.90259 25.73034 23.80822 20.58448 18.01704 15.94907 12.87858 11.72552 10.75697 9.93567 9.23303 7.63805 TABLE PV.1 Present Value of 1 periods 1 2 3 4 5 6 7 8 9 10 2% 21/2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 15% 0.98039 0.97561 0.97087 0.96156 0.95238 0.94340 0.93458 0.92593 0.91743 0.90909 0.90090 0.89286 0.86957 0.96117 0.95181 0.94260 0.92456 0.90703 0.89000 0.87344 0.85734 0.84168 0.82645 0.81162 0.79719 0.75614 0.94232 0.92860 0.91514 0.88900 0.86384 0.83962 0.81630 0.79383 0.77218 0.75132 0.73119 0.71178 0.65752 0.92385 0.90595 0.88849 0.85480 0.82270 0.79209 0.76290 0.73503 0.70843 0.68301 0.65873 0.63552 0.57175 0.90583 0.88385 0.86261 0.82193 0.78353 0.74726 0.71299 0.68058 0.64993 0.62092 0.59345 0.56743 0.49718 0.88797 0.86230 0.83748 0.79031 0.74622 0.70496 0.66634 0.63017 0.59627 0.56447 0.53464 0.50663 0.43233 0.87056 0.84127 0.81309 0.75992 0.71068 0.66506 0.62275 0.58349 0.54703 0.51316 0.48166 0.45235 0.37594 0.85349 0.82075 0.78941 0.73069 0.67684 0.62741 0.58201 0.54027 0.50187 0.46651 0.43393 0.40388 0.32690 0.83676 0.80073 0.76642 0.70259 0.64461 0.59190 0.54393 0.50025 0.46043 0.42410 0.39092 0.36061 0.28426 0.82035 0.78120 0.74409 0.67556 0.61391 0.55839 0.50835 0.46319 0.42241 0.38554 0.35218 0.32197 0.24719 0.80426 0.76214 0.72242 0.64958 0.58468 0.52679 0.47509 0.42888 0.38753 0.35049 0.31728 0.28748 0.21494 0.78849 0.74356 0.70138 0.62460 0.55684 0.49697 0.44401 0.39711 0.35554 0.31863 0.28584 0.25668 0.18691 0.77303 0.72542 0.68095 0.60057 0.53032 0.46884 0.41496 0.36770 0.32618 0.28966 0.25751 0.22917 0.16253 0.75788 0.70773 0.66112 0.57748 0.50507 0.44230 0.38782 0.34046 0.29925 0.26333 0.23199 0.20462 0.14133 0.74301 0.69047 0.64186 0.55526 0.48102 0.41727 0.36245 0.31524 0.27454 0.23939 0.20900 0.18270 0.12289 0.72845 0.67362 0.62317 0.53391 0.45811 0.39365 0.33873 0.29189 0.25187 0.21763 0.18829 0.16312 0.10687 0.71416 0.65720 0.60502 0.51337 0.43630 0.37136 0.31657 0.27027 0.23107 0.19785 0.16963 0.14564 0.09293 0.70016 0.64117 0.58739 0.49363 0.41552 0.35034 0.29586 0.25025 0.21199 0.17986 0.15282 0.13004 0.08081 0.68643 0.62553 0.57029 0.47464 0.39573 0.33051 0.27651 0.23171 0.19449 0.16351 0.13768 0.11611 0.07027 0.67297 0.61027 0.55368 0.45639 0.37689 0.31180 0.25842 0.21455 0.17843 0.14864 0.12403 0.10367 0.06110 11 12 13 14 15 16 17 18 19 20