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Analyze the lease capitalization tests for this lease for Tamarisk. Prepare the journal entries for Tamarisk for 2020. (Credit account titles are automatically indented when
Analyze the lease capitalization tests for this lease for Tamarisk. Prepare the journal entries for Tamarisk for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to 2 decimal places, e.g. 52.75. If no entry is required, select "No entry" for the account titles and enter Ofor the amounts. Record journal entries in the order presented in the problem.) Click here to view factor tables. Date Account Titles and Explanation Debit Credit (To record the lease) (To record the first lease payment) (To record year end entry) Tamarisk Company, a risky start-up, is evaluating a lease arrangement being offered by TSP Company for use of a standard computer system. The lease is non-cancelable, and in no case does Tamarisk receive title to the computers during or at the end of the lease term. The lease starts on January 1, 2020, with the first rental payment due on January 1, 2020. Additional information related to the lease and the underlying leased asset is as follows. Yearly rental $3,485.35 Lease term 3 years Estimated economic life 5 years Purchase option $3,420 at end of 3 years, which approximates fair value Renewal option 1 year at $1,710; no penalty for nonrenewal; standard renewal clause Fair value at commencement $11,400 Cost of asset to lessor $11,400 Residual value: Guaranteed -0- Unguaranteed $3,420 Lessor's implicit rate (known by the lessee) 12% Estimated fair value at end of lease $3,420
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