Chapter 18, Problem 18.8E

Classification as Finance or Operating Lease, Lessor, Journal Entries, Guaranteed Residual Value. Using the same information presented in E18-7, complete the following requirements.

Required

1. a. Prepare the entries for the lessor, SBE, for the first year of the lease. Determine the implicit rate
2. b. Would the accounting for the lessor change if a third party guarantees a residual value of $20,000 and collection of this amount is probable?
3. c. Prepare the amortization tables needed (if any) to account for the lease using the part (b) assumptions