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On January 1,2020 , a machine was purchased for $860,000 by Metlock C0. The machine...

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Accounting

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On January 1,2020 , a machine was purchased for $860,000 by Metlock C0. 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 1,2020, with annual rent payments of $270,000 due at the beginning of each year, starting January 1, 2020. 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 foctor toble provided.) (a) How much should Metlock report as income before income tax on this lease for 2020 ? Income before income tax $ (b) Record the journal entries Ivanhoe would record for 2020 on this lease, assuming its incremental borrowing rate is 9% and the rate implicit in the lease is unknown. (Credit account titles are outomatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.)

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