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Lowe Corporation enters into an agreement with Newlin Rentals Co. on January 1, 20x1 for the purpose of leasing a machine to be used in its manufacturing operations. The following data pertain to the agreement:

i. The term of the non-cancelable lease is 3 years with no renewal option. Payments of $194,016 are due on December 31 of each year.

ii. The fair value of the machine on January 1, 20x1, is $500,000. The machine has a remaining economic life of 10 years, with no salvage value. The machine reverts to the lessor upon the termination of the lease. And, the equipment is not a specialized use item.

iii. Both Lowe and Newlin depreciates all machinery it owns on a straight-line basis, no residual.

iv. Lowe's incremental borrowing rate is 10% per year. Lowe does not have knowledge of the 8% implicit rate used by Newlin.

v. Assume Newlin considers collectability to be reasonably assured and has no material future costs associated with the lease.

10% factor = 2.48685 8% factor = 2.57710

a. What type of lease is this from Lowe Corporation's (lessee) viewpoint?

b. What type of lease is this from Newlin Rentals Co.(lessor) viewpoint?

c.Prepare the amortization table for the lease payments (Rounded to the nearest dollar.)

Date	Payment	Interest Expense	Principle	Liability balance
1a.				1b
2a	2b	2c	2d	2e
3a	3b	3c	3d	3e
4a	4b	4c	4d	4e

d. Prepare journal entries for year 1 for both Lowe and Newlin,

Lowe Newlin

1/1

12/31

e. Prepare journal entries for year 1 for both Lowe and Newlin assuming the lease is cancelable,collection is not reasonably assured, and there are material uncertain future costs.

Lowe Newlin

1/1

12/31

Example answer a. Provide name of lease type b. Provide name of lease type c. Provide the numbers that correspond with the boxes, as follows 1a. Date 1b Beginning balance of lease 2a. Date 2b payment 2c interest amount 2d principle amount 2e Lease balance and so on d. Provide the journal entries for both the Lessee and Lessor for year 1 under original circumstances. Make sure it is clear you debits and credits.e. Provide the journal entries for both th

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