3. Teal Mountain Company leases an automobile with a fair value of $15,005 from John Simon Motors, Inc., on the following terms: 1. Non-cancelable term of 50 months. 2. Rental of $300 per month (at the beginning of each month). Teal Mountain guarantees a residual value of $1,800. Delaney expects the probable residual value to be $1,800 at the end of the lease term. Estimated economic life of the automobile is 60 months. 5. Teal Mountain's incremental borrowing rate is 6% a year (0.5% a month). Simon's implicit rate is unknown. Click here to view factor tables (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) 4. (a) Your answer is correct. What is the nature of this lease to Teal Mountain? The nature of this lease is a/an finance lease. Click if you would like to Show Work for this question: Open Show Work SHOW LIST OF ACCOUNTS SHOW SOLUTION SHOW ANSWER LINK TO TEXT LINK TO TEXT (b) X Your answer is incorrect. Try again. What is the present value of the lease payments to determine the lease liability? (Round answer to 0 decimal places, e.g. 5,275.) Present value of the lease payments 1800 Click if you would like to Show Work for this question: Open Show Work (c) Your answer is partially correct. Try again. Based on the original fact pattern, record the lease on Teal Mountain's books at the date of commencement. (Credit acc are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Right-of-Use Asset 16805 Lease Liability 16805 Click if you would like to Show Work for this question: Open Show Work Your answer is partially correct. Try again. Record the first month's amortization on Teal Mountain's books (assume straight-line). (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 5,275.25.) Account Titles and Explanation Debit Credit Depreciation Expense Accumulated Depreciation Click if you would like to Show Work for this question: Open Show Work