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Use the information below to answer the following questions related to lease accounting. Show your work to enable me to provide you with partial credit,
Use the information below to answer the following questions related to lease accounting. Show your work to enable me to provide you with partial credit, and clearly label your answer. On January 1, 2019, the Smith Building Company (SBC, leased equipment with an economic ife of 5 years from the Novak Equipment Company (NEC). The lease contains the following terms and provisions: The lease has a term of 4 years, and the equipment has an economic life of 5 years: The annual rental payment is $50,000, payable at the end of each year. The interest rate implicit in the lease is 10% and is known to SBC. The equipment has an unguaranteed residual value of $15,000. The fair value of the equipment is $168,738.45. The present value of the unguaranteed residual value is $10,245.20. Both SBC and NEC use the straight-line method to depreciate similar equipment. The present value factors are as follows ( n is the number of periods): Using the space below, prepare the accretion schedule for the unguaranteed residual asset for the Novak Equipment Company (the lessor) for January 1, 2019, and December 31, 2019/2020/2021/2022. Using the space below, prepare the lease table for the Novak Equipment Company (the les for) for January 1, 2019, and December 31, 2019/2020/2021/2022. Use the insert table tool to help you input your answer. If accretion is treated as interest income, how much total interest income will Novak Equipment Company recognize in 2019 Table 3 "The Present Value of $1 Table 4 "The Present Value of an Ordinary Annuity" Table 5 "The Present Value of an Annuity Due". Specifically, what type of lease is this for the Smith Building Company? What type of lease is this for the Novak Equipment Company
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