Please do not give image format On January 1, 2023, Lavery Corp., which follows ASPE, leased equipment to Sunland Ltd., which follows IFRS. Both Lavery andSunland have calendar year ends. The following information concerns this lease:1.2.3.4.5.6.The term of the non-cancellable lease is six years, with no renewal option. The equipment reverts to the lessor at thetermination of the lease, at which time it is expected to have a residual value (not guaranteed) of $6,400. Sunland depreciatesall its equipment on a straight-line basis.Equal rental payments are due on January 1 of each year, beginning in 2023.The equipment's fair value on January 1, 2023, is $151,000 and its cost to Lavery is $110,000.The equipment has an economic life of seven years.Lavery set the annual rental to ensure a 8% rate of return. Sunland's incremental borrowing rate is 9% and the lessor'simplicit rate is unknown to the lessee.Collectibility of lease payments is reasonably predictable and there are no important uncertainties about anyunreimbursable costs that have not yet been incurred by the lessor.Show Transcribed TextDAnnual rental payment $CUsing (1) time value of money tables, (2) a financial calculator, or (3) Excel spreadsheet functions, calculate the amount of theannual rental payment. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 5,275.) Prepare all necessary journal entries and adjusting entries for Sunland for 2023. (List all debit entries before credit entries. Creditaccount titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" forthe account titles and enter O for the amounts. Record journal entries in the order presented in the problem. Round factor values to 5decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275.)Account Titles and ExplanationDate(To record inception and payment of lease)(To record depreciation expense)Date(To record interest)Show Transcribed TextPrepare all necessary journal entries and adjusting entries for Lavery for 2023. (List all debit entries before credit entries. Creditaccount titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" forthe account titles and enter O for the amounts. Record journal entries in the order presented in the problem. Record journal entries in theorder presented in the problem. Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275.)Account Titles and Explanation(To record inception of lease and cost of goods sold)(Collection of lease payment)Debit(To record interest)CreditDebitCredit

The process through which a business records the financial impact of its leasing activity is known…

On January 1, 2023, Lavery Corp., which follows ASPE, leased equipment to Sunland Ltd., which follows IFRS. Both Lavery and Sunland have calendar year ends. The following information concerns this lease: 1. 2. 3. 4. 5. 6. The term of the non-cancellable lease is six years, with no renewal option. The equipment reverts to the lessor at the termination of the lease, at which time it is expected to have a residual value (not guaranteed) of $6,400. Sunland depreciate all its equipment on a straight-line basis. Equal rental payments are due on January 1 of each year, beginning in 2023. The equipment's fair value on January 1, 2023, is $151,000 and its cost to Lavery is $110,000. The equipment has an economic life of seven years. Lavery set the annual rental to ensure a 8% rate of return. Sunland's incremental borrowing rate is 9% and the lessor's implicit rate is unknown to the lessee. Collectibility of lease payments is reasonably predictable and there are no important uncertainties about any unreimbursable costs that have not yet been incurred by the lessor. Show Transcribed Text Using (1) time value of money tables, (2) a financial calculator, or (3) Excel spreadsheet functions, calculate the amount of the annual rental payment. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 5,275.) Annual rental payment $ LA

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q