Assume the same data as in P20 13 and that Provincial

#1509
Assume the same data as in P20–13 and that Provincial Airlines Corp. has an incremental
borrowing rate of 8%.InstructionsAnswer the following questions, rounding all numbers to the
nearest dollar.(a) Discuss the nature of this lease in relation to the lessee. (b) What
classification will Provincial Airlines Corp. give to the lease? (c) What difference, if any, would
occur in the classification of the lease if Provincial were using IFRS?(d) Using time value of
money tables, a financial calculator, or computer spreadsheet functions, calculate the amount
ofthe initial obligation under capital leases.(e) Prepare a 10-year lease amortization schedule for
the lease obligation using a computer spreadsheet.(f) Prepare all of the lessee’s journal entries
for the first year, assuming that the lease year and Provincial Airlines’ fiscal year are the
same.(g) Prepare the entries in (f) again, assuming that the residual value of $15,000 was
guaranteed by the lessee. (h) Prepare the entries in (f) again, assuming a residual value at the
end of the lease term of $45,000 and a purchase option of $15,000.View Solution:
Assume the same data as in P20 13 and that Provincial

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