The following facts pertain to a non-cancelable lease agreement between Mooney Company and Rode Company.

Commencement date Jan 1, 2017

Annual lease payment due at the beginning of each year, beginning with Jan 1, 2017 $20,471.94

Bargain purchase option price at end of lease term $ 4,000.00

Lease term 5 years

Economic life of leased equipment 10 years

Lessor's cost $65,000.00

Fair value of asset at Jan 1, 2017 $91,000.00

Implicit rate known by both parties 8%

Incremental borrowing rate 10%

Collectability of the lease payments by Mooney probable

Instructions: Answer the following questions with the above information.

a) Who is the lessor in this contract? _____________________________

b) Who is the lessee in this contract? _____________________________

c) Which interest rate the lessor will use to determine present values? _____%

d) Note: This is not an amortization table. Read question carefullye) What is the lessees present value of the lease payments? $_______________

f) Which lease classification tests are positive in this contract (say Yes or No and why)?

#1 ______________________________________________________________

#2 ______________________________________________________________

#3 ______________________________________________________________

#4 ______________________________________________________________

#5______________________________________________________________

g) What type of lease is this one for the lessor?____________________________________

d)_What are the lease payments in this contract (provide name and amount)? Lease payment type Payment frequency during lease term Amount Present Value FactorPresent Value at from CH6 tables Jan , 2017