Use the information below to answer the next seven (4-10) multiple choices.

Ivanhoe Leasing Company (Lessor) agrees to lease equipment to Sarasota Construction (Lessee) on January 1, 2020. The following information relates to the lease agreement.

• The term of the lease is 8 years with no renewal option, and the machinery has an estimated economic life of 10 years.
• The cost of the machinery is $525,000, and the fair value of the asset on January 1, 2020, is $718,000.
• At the end of the lease term, the asset reverts to the lessor and has an unguaranteed residual value of $83,000. Sarasota incurs initial direct costs of $1,400 and amortizes all of its leased equipment on a straight-line basis.
• The lease agreement requires equal annual rental payments, beginning on January 1, 2020.
• The collectibility of the lease payments is probable.
• Ivanhoe desires an 11% rate of return on its investments. Sarasotas incremental borrowing rate is 12%, and the lessors implicit rate is known to Sarasota.

4. What is the amount of the annual rental payment charged by Lessor?
5. On 1/1/2020, Lessors entry to record the lease includes a debit to Leave Receivable and a credit to Sales Revenue in the following amounts, respectively Lease Receivable Sales Revenue

   $718,000$718,000

   $681,984$681,984

   $718,000$681,984

   $681,984$645,968

6. For 2020, Lessor reports Interest Revenue in the amount of?

7. On 1/1/2020, Lessees entry to record the lease includes a debit to Right-of-Use (ROU) Asset in the amount of?

8. For 2020, Lessee reports a total lease expense in the amount of?

9. ASSUMING this were an operating lease for Lessee, on 1/1/2020, Lessees entry to record the lease includes a debit to Right-of-Use (ROU) Asset in the amount of?
10. ASSUMING this were an operating lease for Lessee, on 12/31/2020, Lessees entry to recognize Lease Expense includes a debit to Lease Expense and a credit to Right-of-Use (ROU) Asset in the following amounts, respectively

    Lease Expense Right-of-Use (ROU) Asset

    $119,391$57,506

    $147,308$85,423

    $147,133$85,248

    $119,566$57,681