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Larkspur Company leases an automobile with a fair value of $10,858 from John Motors, Inc, on the following terms. 1. Non-cancelable term of 50 months. 2. Rental of $220 per month (at the beginning of each month). (The present value at 0.5% per month is $9.760 ) 3. Larkspur guarantees a residual value of $1,120 (the present value at 0.5% per month is $873 ). Larkspur expects the probable residual value to be $1,120 at the end of the lease term. 4. Estimated economic life of the automobile is 60 months. 5. Larkspur's incremental borrowing rate is 6% a year ( 0.50% a month), John's implicit rate is unknown. Click here to view factor tables. (For colculotion purposes, use 5 decimal places as displayed in the factor table provided.) (a) Your answer is correct. What is the nature of this lease to Larkspur? The nature of this lease is a/an lease. Atrempts: 1 of 3 used What is the present value of the lease payments to determine the lease liability? (Round answer to 0 decimal pluces es 5.275) Present value of the lease payments (c) Your answer is correct Based on the original fact pattem, record the lease on Larkspur's books at the date of commencement (List detit entry before credit entry. Credlt account tifles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the occount titles ond enter Of for the amounts) Account Titles and Explanation Debit Credit Right-of-Use Asset Lease Liability eTextbook and Media List of Accounts Attempts: 1 of 3 used (d) Your answer is correct. FRecord the first month's lease payment (at commencement of the lease). (Uist debit entry before credit entry Credit cccount tiles are automatically indented when amount is entered. Do not indent manually. if no entry is requird, select "No Entry" for the occount titles ond enter O for the amounts. Round answers to O decimal places, es, 5,275.) Account Titles and Explanation Debit Lease Lobility etestbook and Media List of Aconunts Attempts: 1 of 3 used Record the second month's lease payment. (Ust all debit entries before credit entries. Credit occount iitles are autamatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to 0 decimal places, eg. 5,275.) eTextbook and Media List of Accounts Attempts: 1 of 3 used (f) Your answer is correct. Record the first month's amortization on Larkspur's books (assume straight-line), (List debit entry before credit entry, Credit occouint t tities are autornotically indented when amount is entered. Do not indent manuolly. If no entry is required, select "No Entry" for the ocenuint tities and enter O for the amounts. Round answers to O decimal ploces, e.5. 5,275. Suppose that instead of $1,120, Larkspur expects the residuai value to be only $500 (the guaranteed amount is still $1,120 ). How does the calculation of the present value of the lease payments change from part (b)? (Round answer to 0 decimol places, eg. 5.275.)