United Ltd leases mechanical robots which work mechanically without original thought to a variety of business customers under long-term direct finance leases. Uniteds implicit rate under these arrangements is 10%.

United leased a robot it purchased for $30,900 to a local publisher, Dickens Ltd, on Dec 31, 2020. The lease contract specified the first annual payment $8,000 was payable on Jan 1, 2021, the commencement of the lease, and each Jan 1 through 2023. The publisher had the option to purchases the robot on Dec 31, 2023, the end of the lease term, for $12,000 when it was expected to have a market value of $19,000. The robot had a useful life of 5 years. Both used the straight-line method for depreciation and their financial year ended Dec 31.

Answer Questions 1 to 6 pertaining to the lessor based on the information given in the question above.(Round off to the nearest dollars. Some journals may have two entries only.)

1. What criterion is met so as to classify the lease as a finance lease?

The criterion given in the question to classify the lease as a finance lease:

2.How the lessor records the lease on Jan 1,2021the commencement of the lease, without consideration of the first lease payment collection:

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3.How the lessor records the collection of the lease payment on Jan 1, 2022?

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4.How the lessor records the accrual of interest revenue on Dec 31,2022?

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5.How the lessor records the collection of the bargain purchase option price on December 30,2023, the end of the lease?

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6.Lets assume United manufactured therobot under the lease at a cost of$26000 instead of purchase. What is the dealers profit? Show calculation.

Calculation:	The dealer's profit:

Answer Questions 7 to 10 pertaining to the lessee based on the information given in the question above. (Round off the answer to the nearest dollar. Some journals may have two entries only.)

7.What is the annual depreciation expense charged to the income statement? Show calculation.

Calculation:	Annuall depreciation:

8.How the lessee records the lease on Jan 1,2021the commencement of the lease:

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9.How the lessee records the annual lease payment on Jan 1, 2022?

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10.How the lessee records the payment of the bargain purchase option price on December 31,2023, the end of the lease?

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