Sunland Leasing Corporation, which uses IFRS 16, signs a lease agreement on January 1, 2020, to lease electronic equipment to Wai Corporation, which also uses IFRS 16. The term of the non-cancellable lease is two years and payments are required at the end of each year. The following information relates to this agreement. 1. Wai Corporation has the option to purchase the equipment for $12,400 upon the termination of the lease and this option is reasonably certain to be exercised. 2. The equipment has a cost and fair value of $160,000 to Sunland Leasing Corporation. The useful economic life is two years, with a residual value of $12,400. 3. Wai Corporation is required to pay $6,200 each year to the lessor for insurance costs. 4. Sunland Leasing Corporation wants to earn a return of 7% on its investment. 5. Collectibility of the payments is reasonably predictable, and there are no important uncertainties surrounding the costs that have not yet been incurred by the lessor. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Using time value of money tables, a financial calculator, or Excel functions, calculate the lease payment that Sunland Leasing would require from Wai Corporation. (Hint: You may find the ROUND formula helpful for rounding in Excel.) (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 2 decimal places, e.g. 52.75.) Lease payments Prepare a lease amortization schedule for Sunland Leasing for the term of the lease. (Round answers to 0 decimal places, e.g. 52,754.) SUNLAND LEASING CORPORATION (Lessor) Lease Amortization Schedule Annual Payment Interest Net Excluding on Net Investment Net Date Executory Costs Investment Recovery Investment 1/1/20 12/31/20 12/31/21 Prepare the journal entries on Sunland Leasing's books to reflect the payments received under the lease and to recognize income for the years 2020 and 2021. (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 0 for the amounts. Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 52,754.) Date Account Titles and Explanation Debit Credit (To record inception of lease.) (Collection of lease payment.) DO (To record interest.) (To record interest.) SHOW LIST OF ACCOUNTS Assuming that Wai Corporation exercises its option to purchase the equipment on December 31, 2021, prepare the journal entry to reflect the sale on Sunland Leasing's books. (Credit account titles are automatically indented when the amount entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Round answers to o decimal places, e.g. 52,754.) Date Account Titles and Explanation Debit Credit 12/31/21 SHOW LIST OF ACCOUNTS What amount would Wai Corporation capitalize and recognize as a lease liability and corresponding right-to-use asset on signing the lease? (Round answer to 0 decimal places, e.g. 52,257.) Amount
