View Policies Current Attempt in Progress Sheridan Company leases a building to Skysong, Inc. on January 1, 2020. The following facts pertain to the lease agreement. 1. The lease term is 6 years, with equal annual rental payments of $3.346 at the beginning of each year. 2 Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. 3. The building has a fair value of $18,000, a book value to Sheridan of $11,000, and a useful life of 7 years. 4. 5. At the end of the lease term, Sheridan and Skysong expect there to be an unguaranteed residual value of $2,750. Sheridan wants to earn a return of 9% on the lease, and collectibility of the payments is probable. Skysong was unaware of the implicit rate used in the lease by Sheridan and has an incremental borrowing rate of 10%. Click here to view factor tables How would Sheridan (lessor) and Skysong (lessee) classify this lease? 5. Sheridan wants to earn a return of 9% on the lease, and collectibility of the payments is probable. Skysong w implicit rate used in the lease by Sheridan and has an incremental borrowing rate of 10%. Click here to view factor tables. How would Sheridan (lessor) and Skysong (lessee) classify this lease? Sheridan would classify the lease as a lease. Skysong would classify the lease as a lease. How would Sheridan initially measure the lease receivable, and how would Skysong initially measure the lease liability use asset? (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to eg. 5.275) Sheridan How would Sheridan initially measure the lease receivable, and how would Skysong initially measure the lease liability and right-of- use asset? (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places, eg. 5,275) Lease receivable $ Present value of lease pay $ Lease Liability/Right-of-Use Asset eTextbook and Media Last saved 1 secondann O Sheridan Skysong Attempts of Rused 200