Current Attempt in Progress On January $1,2023,$ Lavery Corp., which follows ASPE, leased equipment to Pharoah Ltd$.,$ which follows IFRS. Both Lavery and Pharoah have calendar year ends. The following information concerns this lease: $1.$ 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 $\backslash$$$7,200.$ Pharoah depreciates all its equipment on a straight$-$line basis. $2.$ Equal rental payments are due on January $1$ of each year, beginning in $2023.3.$ The equipment's fair value on January $1,2023,$ is $\backslash (\backslash$$ $149,000\backslash )$ and its cost to Lavery is $\backslash (\backslash$$ $110,000\backslash ).4.$ The equipment has an economic life of seven years. $5.$ Lavery set the annual rental to ensure a $\backslash (11\backslash \%\backslash )$ rate of return. Pharoah's incremental borrowing rate is $\backslash (12\backslash \%\backslash )$ and the lessor's implicit rate is unknown to the lessee. $6.$ 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. Click here to view the factor table PRESENT VALUE OF $1.$ Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. $4.$ The equipment has an economic life of seven years.

$5.$ Lavery set the annual rental to ensure a $\backslash (11\backslash \%\backslash )$ rate of return. Pharoah's incremental borrowing rate is $\backslash (12\backslash \%\backslash )$ and the lessor's implicit rate is unknown to the lessee.

$6.$ 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.

Click here to view the factor table PRESENT VALUE OF $1.$

Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE.

$*$ Your answer is incorrect.

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$.1\mathrm{.}25124$ and final answer to $0$ decimal places, e$.$g$.5,275.)$

Annual rental payment $\backslash$$

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List of Accounts Prepare all necessary journal entries and adjusting entries for Pharoah for $2023.($List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select $"$No Entry" for the account titles and enter $0$ for the amounts." Record journal entries in the order presented in the problem. Round factor values to $5$ decimal places, e$.$g$.1\mathrm{.}25124$ and final answers to $0$ decimal places, e$.$g$.5,275.)$

Debit

Credit

Lease Liability

Cash

$($To record inception and payment of lease$)$

Depreciation Expense

Accumulated Depreciation $-$ Right$-$of$-$Use Asset

$($To record depreciation expense$)$

$($To record interest$)$