On January 1, 2023, Oriole Corporation sold equipment to Liquidity Finance Corp. for $740,000 and immediately...

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On January 1, 2023, Oriole Corporation sold equipment to Liquidity Finance Corp. for $740,000 and immediately leased the equipment back. Both Oriole and Liquidity use ASPE. Other relevant information is as follows. 1. The equipment's carrying value on Oriole's books on January 1, 2023, is $654,000, with an original cost of $980,000.00. The term of the non-cancellable lease is 10 years. Title will transfer to Oriole at the end of the lease. 2. 3. The lease agreement requires equal rental payments of $120,431.59 at the end of each year. 4. 5. 6. The incremental borrowing rate of Oriole is 12%. Oriole is aware that Liquidity set the annual rental to ensure a rate of return of 10%. The equipment has a fair value of $740,000 on January 1, 2023, and an estimated economic life of 10 years, with no residual value. Oriole pays repairs and maintenance expenses of $10,800 per year directly to suppliers. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. (a) Prepare the journal entries for both the lessee and the lessor for 2023 to reflect the sale and leaseback agreement. No uncertainties exist and collectibility is reasonably certain. (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 O for the amounts. Record journal entries in the order presented in the problem. Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 2 decimal places, e.g. 5,275.25.) On January 1, 2023, Oriole Corporation sold equipment to Liquidity Finance Corp. for $740,000 and immediately leased the equipment back. Both Oriole and Liquidity use ASPE. Other relevant information is as follows. 1. The equipment's carrying value on Oriole's books on January 1, 2023, is $654,000, with an original cost of $980,000.00. The term of the non-cancellable lease is 10 years. Title will transfer to Oriole at the end of the lease. 2. 3. The lease agreement requires equal rental payments of $120,431.59 at the end of each year. 4. 5. 6. The incremental borrowing rate of Oriole is 12%. Oriole is aware that Liquidity set the annual rental to ensure a rate of return of 10%. The equipment has a fair value of $740,000 on January 1, 2023, and an estimated economic life of 10 years, with no residual value. Oriole pays repairs and maintenance expenses of $10,800 per year directly to suppliers. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. (a) Prepare the journal entries for both the lessee and the lessor for 2023 to reflect the sale and leaseback agreement. No uncertainties exist and collectibility is reasonably certain. (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 O for the amounts. Record journal entries in the order presented in the problem. Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 2 decimal places, e.g. 5,275.25.)