Question $7$ of $8$

$\frac{1\mathrm{.}67}{5}-=$ :

Stellar Leasing Company agrees to lease equipment to Pearl Corporation on January $1,2025.$ The following information relates to the lease agreement.

The term of the lease is $7$ years with no renewal option, and the machinery has an estimated economiclife of $9$ years.

The cost of the machinery is $$523,000,$ and the fair value of the asset on Jamuary $1,2025,$ is $$758,000.$

At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $$60,000.$ Pearl estimates that the expected residual value at the end of the lease term will be $$60,000.$ Pearl amortizes all of its leased equipment on a straight$-$line basis.

The lease agreement requires equal annual rental payments, beginning on January $1,2025.$

The collectibility of the lease payments is probable.

Stellar desires a $10\%$ rate of return on its investments. Pearl's incremental borrowing rate is $11\%,$ and the lessor's implicit rate is unknown.

$($Assume the accounting period ends on December $31)$

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$($a$)$

Your answer is correct.

Discuss the nature of this lease for both the lessee and the lessor.

This is a for Pearl.

This is a for Stellar.

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Attempts: $1$ of $8$ used

$($b$)$

Your answer is correct.

Calculate the amount of the annual rental payment required. $($Round present value factor colculations to $5$ dedimal places, es$.125124$ and the final answer to $0$ decimal places e$858,972)$

Annual rental payment

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Attempts: $3$ of $8$ used

$($c$)$

Compute the value of the lease liability to the lessee. $($Round present value foctor calculations to $5$ decimal places, $28\mathrm{.}1\mathrm{.}25124$ and the final answer to $0$ decimal places eg$.58,972).$

Present value of minimum lease payments

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Lave for Liter.

Attempts: $0$ of $8$ used

$($d$)$

The paris of this question must be completed in order. This part will be a