Starboard Industries enters into a lease agreement with Bumble Motors to lease an automobile with a fair value of $78,000 under a 5-year lease on December 20, 2022. The lease commences on January 1, 2023, and Starboard will return the automobile to Bumble on December 31, 2027. The automobile has an estimated useful life of 7 years. Starboard made a lease payment of $10,200 on December 20, 2022. In addition, the lease agreement stipulates annual payments of $10,200, due on January 1 of 2023, 2024, 2025, 2026, and 2027. The implicit rate of the lease is 7% and is known by Starboard. Starboard guarantees a residual value of $3,500 and incurs initial direct costs of $1,400. Assuming that this is classified as an operating lease, what is the value of the right-of-use asset at the lease's commencement? A. $58,845 B. $56,350 C. $43,222 D. $41,822 Nace Manufacturing Company leased a piece of nonspecialized equipment for use in its operations from Righteous Leasing on January 1, 2023. The 10 year lease requires lease payments of $6,500, beginning on January 1, 2023, and at each December 31 thereafter through 2031. The equipment is estimated to have a 10 year life, is depreciated on the straight-line basis and will have no residual value at the end of the lease term. Nace's incremental borrowing rate is 5%. Initial direct costs of $1,800 are incurred by the lessee on January 1, 2023. Righteous Leasing acquired the asset just prior to the lease term at a cost of $53,755. Collection of all lease payments is reasonably assured. What is the reduction in the lease liability recorded with the first and second lease payments, respectively? OA. $6,500; $4,190 B. $2,635; $2,503 C. $5,450; $5,450 OD. $50,066; $3,997 Plessings Company leased a piece of machinery to Banana, Inc. on January 1, 2023. The lease is correctly classified as a sales - type lease. Plessings will receive three annual lease payments of $20,600, with the first one received on January 1, 2023. There is no guaranteed or unguaranteed residual value. The fair value of the machine is $50,000 and Plessings incurs initial direct costs of $5,000. What is the implicit rate assuming the initial direct costs are deferred? OA. 25.78% B. 6.06% O c. 12.92% O D. 11.39% On January 1, 2023, Precision Pumps leases nonspecialized pumping equipment to Mega Construction. The equipment is delivered on January 1. The lease term is 4 years with no renewal or purchase options, and title to the leased asset is retained by the lessor at the end of the lease term. The lease requires annual fixed rental payments of $9,000 per year beginning on January 1, 2023, and then December 31 of each year starting on December 31, 2023. The fair value of the equipment is $43,219 and has a carrying amount on Precision's books of $29,389. The equipment has a remaining life of 8 years. The estimated residual value of the equipment is $15,000. The lessee does not guarantee the residual value, but Precision secured an unrelated third party to guarantee $15,000; collection of this guaranteed residual value and lease payments are reasonably certain. The rate implicit in the lease is 8%. There are no prepaid rentals, and neither party to the agreement pays initial direct costs. What is the balance in the net investment in the lease account after the second payment on December 31, 2023? A. $27,957 B. $23,194 C. $40,481 OD. $34,219