(Solved): Present Value for Minimum Lease Payment: 650,311 (b) Your answ ...

(b) Your answer is correct. Calculate the amount of the annual rental payment required. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,972.) Compute the value of the lease liability to the lessee. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,972 .) Present value of minimum lease payments \$ Marigold Leasing Company agrees to lease equipment to Swifty Corporation on January 1, 2025. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. 2. The cost of the machinery is $\$489,000$, and the fair value of the asset on January 1,2025 , is $\$699,000$. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $\$60,000$. Swifty estimates that the expected residual value at the end of the lease term will be $\$60,000$. Swifty amortizes all of its leased equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on January 1, 2025. 5. The collectibility of the lease payments is probable. 6. Marigold desires a $9\%$ rate of return on its investments. Swifty's incremental borrowing rate is $10\%$, and the lessor's implicit rate is unknown. (Assume the accounting period ends on December 31.) Click here to view factor tables. Prepare the journal entries Swifty would make in 2025 and 2026 related to the lease arrangement. (Credit account titles are automatically indented order presented in the problem. List all debit entries before credit entries.) Date Account Titles and Explanation $1/1/25$ $1/1/25$ $12/31/25$ $12/31/25$ $1/1/26$ $12/31/26$ $12/31/26$ $12/31/26$ Right-of-Use Asset Lease Liability (To record the lease.) Lease Liability Cash (To record lease payment.) Amortization Expense Right-of-Use Asset (To record amortization.) Interest Expense Lease Liability (To record interest.) Lease Liability Cash Amortization Expense Right-of-Use Asset (To record amortization.) Interest Expense Lease Liability Debit 650311 121434 (To record interest.)