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ABC Company (ABC) on January 1, 2017, enters into a 10-year noncancelable lease, for equipment having an estimated useful life of 10 years. XYZ Corp.'s implicit interest rate is 8%. ABC uses the straight-line method to depreciate its assets. The lease contains the following provisio 1. Rental payments of $200,000 a the beginning of each six-month period (SEMIANNUAL PAYMENTS). 2. A guarantee by ABC that XYZ Corp. (XYZ) will realize S100,000 from selling the asset (RESIDUAL VALUE) at the expiration of the lease. ABC belivies that it is probable that the expected residual value will be greater than the guaranteed residual value. 3. The lease contains no renewal options. The equipment reverts to lessor at the termination of the lease Required a. b. c. d. Compute the present value test. Compute the present value of the lease payments to be recorded as a liability Prepare an amortization schedule table for the liability through the year 2019 Prepare journal entries for the year 2017 LESSOR ACCOUNTING PROBLEM 2 Using the same data of the previous exercise and assuming the following information, you will answer this exercise from the point of view of the lessor: Collectibility of the payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by XYZ. Additional information 1. Asset's cost $1,500,000 2. Asset's FMV - $2,800,000 uired Prepare journal entries for the year 2017. a