Sunland Steel Corporation, as lessee, signed a lease agreementfor equipment for five years, beginning January 31, 2020. Annualrental payments of $50,000 are to be made at the beginning of eachlease year (January 31). The insurance and repairs and maintenancecosts are the lessee’s obligation. The interest rate used by thelessor in setting the payment schedule is 9%; Sunland’s incrementalborrowing rate is 10%. Sunland is unaware of the rate being used bythe lessor. At the end of the lease, Sunland has the option to buythe equipment for $3,900, which is considerably below its estimatedfair value at that time. The equipment has an estimated useful lifeof seven years with no residual value. Sunland uses straight-linedepreciation on similar equipment that it owns, and follows IFRS16.

Using time value of money tables, a financial calculator, orExcel functions, calculate the PV of the lease obligation.(Round factor values to 5 decimal places, e.g. 1.25124and final answer to 0 decimal places, e.g.5,275.)

Present value

$Enter your answer in accordance to the question statement Prepare the lease amortization schedule for the lease.(Hint: You may find the ROUND formula helpful for roundingin Excel.) (Round answers to 0 decimal places, e.g.5,275.) Prepare the journal entry that should be recorded on January 31,2020, by Sunland. (Credit account titles areautomatically indented when the amount is entered. Do not indentmanually. If no entry is required, select "No Entry" for theaccount titles and enter 0 for the amounts. Round factor values to5 decimal places, e.g. 1.25124 and final answers to 0 decimalplaces, e.g. 5,275.) Date Account Titles and Explanation Debit Credit Jan. 31, 2020 (To record inception of lease and first lease payment.) Prepare any necessary adjusting journal entries at December 31,2020, and the journal entry or entries that should be recorded onJanuary 31, 2021, by Sunland. Sunland does not use reversingentries. (Credit account titles are automaticallyindented when the amount is entered. Do not indent manually. If noentry is required, select "No Entry" for the account titles andenter 0 for the amounts. Round answers to 0 decimal places, e.g.5,275.) What amounts would appear on Sunland’s December 31, 2021 SFPrelative to the lease arrangement? (Round answers to 0decimal places, e.g. 5,275.) Assume that the leased equipment had a fair value of $200,000 atthe inception of the lease, and that no bargain purchase option isavailable at the end of the lease. Would your treatment of thelease change for financial reporting purposes? The lease would be accounted as a Choose the answer from themenu in accordance to the question statement                                                                 lease liabilityright-of-useasset and lease liabilityright-of-use assetoperating lease.