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Bridgeport Leasing Company agrees to lease equipment to Indigo Corporation on January 1

Accounting

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Bridgeport Leasing Company agrees to lease equipment to Indigo Corporation on January 1. 2020. 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 $518.000. and the fair value of the asset on January 1. 2020. is 5648.000. 3. At the end of the lease term. the asset reverts to the lessor and has a guaranteed residual value of 550.000. Indigo estimates that the expected residual value at the end of the lease term will be 50,000. Indigo amortizes all of its leased equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on January 1, 2020. 5. The collectibility of the lease payments is probable. 6. Bridgeport desires a 11% rate of return on its investments. Indigo's incremental borrowing rate is 12%. and the lessor's implicit rate is unknown. 
(Assume the accounting period ends on December 31) 
Click here to view factor tables. 
Discuss the nature of this lease for both the lessee and the lessor. 
This is a 
This is a 
operating lease 
finance lease v 
eText book and Media 
List of Accounts 
for Indigo. 
for Bridgeport. 
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 es 58,9724 
Annual rental payment