Chapter 21 Homework Question 3 of 8 View Policies Show Attempt History < > Current Attempt in Progress 0.16/1 Assume that on December 31, 2019, Larkspur Aerospace signs a 8-year, non-cancelable lease agreement to lease a hanger from Aero Field Management Company. The following information pertains to this lease agreement: 1. The agreement requires equal rental payments of $164,478 beginning on December 31, 2019. 2. The fair value of the building on December 31, 2019 is $1,114,090. 3. The building has an estimated economic life of 10 years, a guaranteed residual value of $50,100, and an expected residual value of $35,100. Larkspur depreciates similar buildings on the straight-line method. 4. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor. 5. Larkspur's incremental borrowing rate is 6% per year. The lessor's implicit rate is not known by Larkspur. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Chapter 21 Homework 8 Question 3 of 8 < 0.16/1 E Prepare the journal entries on the lessee's books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2019, 2020, and 2021. Larkspur's fiscal year-end is December 31. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to O decimal places e.g. 5,275.) ate 19 /19 /20 Account Titles and Explanation Right-of-Use Asset Lease Liability (To record the lease) Lease Liability Cash (To record first lease payment) Amortization Expense Right-of-Use Asset (To record amortization of the right-of-use asset) 11/20 Interest Expense /21 Lease Liability Cash (To record second lease payment) Amortization Expense Right-of-Use Asset (To record amortization of the right-of-use asset) Debit 1114090 164478 139261.25 56976.72 Credit 1114090 164478 139261.25 (To record amortization of the right-of-use asset) 11/20 Interest Expense /21 11/21 Lease Liability Cash (To record second lease payment) Amortization Expense Right-of-Use Asset (To record amortization of the right-of-use asset) Interest Expense Lease Liability Cash (To record third lease payment) 56976.72