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Carla 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
Carla 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 canse does Carla 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 Lease term Estimated economic life Purchase option Renewal option Fair value at commencement Cost of asset to lessor Residual value Guaranteed Unguaranteed Lessor's implicit rate known by the lessee) Estimated fair value at end of lease $3.485.35 3 years 5 years $3.420 at end of 3 years, which approximates fair value 1 year at $1.710, no penalty for nonrenewal standard renewal clause $11.400 $11.400 -0- $3,420 12 $3,420 (a) Analyze the lease capitalization tests for this lease for Carla. Prepare the journal entries for Carla for 2020. (Credit account titles ore automatically indented when the amount is entered. Do not indent manually Round present value factor calculations to 5 decimal places.es 1.25124 and the final answers to 2 decimal places, s. 52.75. 1 no entry is required, select "No entry for the account titles and enter for the amounts. Record Journal entries in the order presented in the problem) Click here to view factor tables. Account Titles and Explanation Debit Cre Date (To record the lease) (To record the first lease payment [To record year end entry
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