Blue Incorporated leases a piece of equipment to Larkspur Corporation on January 1, 2020. The lease agreement called for annual rental payments of $4,569 at the beginning of each year of the 4-year lease. The equipment has an economic useful life of 6 years, a fair value of $24,300, a book value of $19,300, and both parties expect a residual value of $8,250 at the end of the lease term, though this amount is not guaranteed. Blue set the lease payments with the intent of earning a 4% return, and Larkspur is aware of this rate. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Determine the nature of the lease to both Blue and Larkspur. The lease is a/an lease to Blue. The lease is a/an L lease to Larkspur. Prepare the lease amortization schedule(s) for Larkspur for all 4 years of the lease. (Round answers to o decimal places, e.g. 5,275.) LARKSPUR CORPORATION Lease Amortization Schedule Annuity-Due Basis Reduction of Interest on Liability Lease Liability Annual Payment Lease Liability Date 1/1/20 $ 1/1/20 1/1/21 1/1/22 1/1/23 Lease Expense (Straight-Line) Lease Expense Schedule Interest on Amortization of Lease Liability ROU Asset Carrying Value of ROU Asset Date 1/1/20 $ 12/31/20 12/31/21 12/31/22 12/31/23 Prepare the journal entries for Larkspur for 2020 and 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit (To record the lease) (To record lease payment) Suppose Larkspur incurs initial direct costs of $800 related to the lease. Prepare the journal entries for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit (To record the lease) (To record lease payment) Blue Incorporated leases a piece of equipment to Larkspur Corporation on January 1, 2020. The lease agreement called for annual rental payments of $4,569 at the beginning of each year of the 4-year lease. The equipment has an economic useful life of 6 years, a fair value of $24,300, a book value of $19,300, and both parties expect a residual value of $8,250 at the end of the lease term, though this amount is not guaranteed. Blue set the lease payments with the intent of earning a 4% return, and Larkspur is aware of this rate. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Determine the nature of the lease to both Blue and Larkspur. The lease is a/an lease to Blue. The lease is a/an L lease to Larkspur. Prepare the lease amortization schedule(s) for Larkspur for all 4 years of the lease. (Round answers to o decimal places, e.g. 5,275.) LARKSPUR CORPORATION Lease Amortization Schedule Annuity-Due Basis Reduction of Interest on Liability Lease Liability Annual Payment Lease Liability Date 1/1/20 $ 1/1/20 1/1/21 1/1/22 1/1/23 Lease Expense (Straight-Line) Lease Expense Schedule Interest on Amortization of Lease Liability ROU Asset Carrying Value of ROU Asset Date 1/1/20 $ 12/31/20 12/31/21 12/31/22 12/31/23 Prepare the journal entries for Larkspur for 2020 and 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit (To record the lease) (To record lease payment) Suppose Larkspur incurs initial direct costs of $800 related to the lease. Prepare the journal entries for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit (To record the lease) (To record lease payment)
