On January $1,2025,$ a machine was purchased for $$1,040,000$ by Metlock Co$.$ The machine is expected to have an $8-$year life with no

salvage value. It is to be depreciated on a straight$-$line basis. The machine was leased to Ivanhoe Inc. for $3$ years on January $1,2025,$

with annual rent payments of $$260,000$ due at the beginning of each year, starting January $1,2025.$ The machine is expected to have a

residual value at the end of the lease term of $$562,500,$ though this amount is unguaranteed.

Click here to view factor tables.

$($For calculation purposes, use $5$ decimal places as displayed in the factor table provided.$)$

$($a$)$

Your answer is correct.

How much should Metlock report as income before income tax on this lease for $2025?$

Income before income tax $

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List of Accounts

Attempts: $1$ of $4$ used

$($b$)$

Record the journal entries Ivanhoe would record for $2025$ on this lease, assuming its incremental borrowing rate is $5\%$ and the

rate implicit in the lease is unknown. $($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.

Round answers to $0$ decimal places, e$.$g$.5,275.$ Record journal entries in the order presented in the problem.$)$

Date

Account Titles and Explanation

Debit

Credit

$($To record the lease$)$