solve for all red boxes, show work Wildhorse Company leases a building to Windsor, 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 $3,933 at the beginning of each year.Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of aspecialized nature.2.3.The building has a fair value of $22,000, a book value to Wildhorse of $15,000, and a useful life of 7 years.4.At the end of the lease term, Wildhorse and Windsor expect there to be an unguaranteed residual value of $3,750.Wildhorse wants to earn a return of 8% on the lease, and collectibility of the payments is probable. Windsor was unaware ofthe implicit rate used in the lease by Wildhorse and has an incremental borrowing rate of 9%.5.Click here to view factor tables.How would Wildhorse (lessor) and Windsor (lessee) classify this lease?Wildhorse would classify the lease as aoperatinglease.Windsor would classify the lease as afinanceV lease.How would Wildhorse initially measure the lease receivable, and how would Windsor 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,e.g. 5,275.)WildhorseLease receivable$22219Present value of lease pay2$19562WindsorLease Liability/Right-of-Use Asset2$19240

lease term is 6 years, with equal annual rental payments of $3,933 at the beginning of each year. hership does not transfer at the end of the lease term, there is no bargain purchase option, and th ialized nature. building has a fair value of $22,000, a book value to Wildhorse of $15,000, and a useful life of 7 y he end of the lease term, Wildhorse and Windsor expect there to be an unguaranteed residual val Ihorse wants to earn a return of 8% on the lease, and collectibility of the payments is probable. W mplicit rate used in the lease by Wildhorse and has an incremental borrowing rate of 9%.

lease term is 6 years, with equal annual rental payments of $3,933 at the beginning of each year. hership does not transfer at the end of the lease term, there is no bargain purchase option, and th ialized nature. building has a fair value of $22,000, a book value to Wildhorse of $15,000, and a useful life of 7 y he end of the lease term, Wildhorse and Windsor expect there to be an unguaranteed residual val Ihorse wants to earn a return of 8% on the lease, and collectibility of the payments is probable. W mplicit rate used in the lease by Wildhorse and has an incremental borrowing rate of 9%.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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