Bramble Corporation entered into a lease agreement on January 1, 2020, to provide Cullumber Company with a piece of machinery The terms of the lease agreement were as follows. 1 2 3 The lease is to be for 3 years with rental payments of $ 13,768 to be made at the beginning of each year. The machinery has a fair value of $ 60,000, a book value of $ 40,000, and an economic life of 8 years. At the end of the lease term, both parties expect the machinery to have a residual value of $ 25,000, none of which is guaranteed The lease does not transfer ownership at the end of the lease term, does not have a bargain purchase dption, and the asset is not of a specialized nature The Implicit rate is 6%, which is known by Cullumbet Collectibility of the payments is probable 4 5 6 Your answer is correct. Evaluate the criteria for classification of the lease, and describe the nature of the lease. For the lessee, it is a operating lease and for the lessor, it is a operating tease CULLUMBER COMPANY Lease Amortization Schedule Annuity-Due Basis Interest on Liability Reduction of Lease Liability Annual Payment Lease Liability 1 13768 $ 256242 13768 1515 12253 12989 13768 779 12989 0 Lease Expense Schedule (A) Straight-Line Expense (B) Interest on Lease Liability (C) Amortization of Right-of-Use Asset (and Liability) (A-B) Carrying Value of Right-of-Use Asset 13768 13768 NA Textbook and Media Prepare the 2020 journal entries for Cullumber. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts. Round present value factor calculations to 5 decimal places, eg. 1.25124 and the final answer to decimal places es. 58,971) Date Account Titles and Explanation Debit Credit Jan. 1 Right of Use Asset Les Lab (To record lease) Jan. 1 Lean 1376 17763 (Ta record first case payment) III Dec 31 To record lease sense and amortization)