Oakridge Leasing Corporation signs an agreement on January 1, 2020, to lease equipment to Crane Limited. Oakridge and Crane follow ASPE. The following information relates to the agreement.

1. The term of the non-cancellable lease is five years, with no renewal option. The equipment has an estimated economic life of six years.

2. The assets fair value at January 1, 2020, is $85,000.

3. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $6,000, which is guaranteed.

4. Crane Limited assumes direct responsibility for all executory costs, which include the following annual amounts: $1,000 to Rocky Mountain Insurance Ltd. for insurance and $1,700 to James Township for property taxes.

5. The agreement requires equal annual rental payments of $20,567 to Oakridge, the lessor, beginning on January 1, 2020.

6. The lessees incremental borrowing rate is 14%. The lessors implicit rate is 13% and is known to the lessee.

7. Crane Limited uses the straight-line depreciation method for all equipment.

8. Crane uses reversing entries when appropriate.

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Prepare a schedule contrasting the journal entries prepared in part (c) with those using an unguaranteed residual value of $6,000. Ignore payments of insurance and property taxes. (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 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.) Guaranteed Residual Value Unguarar Account Titles and Explanation Debit Credit Capitalization of lease 1/1/20: End of year 31/12/20: To record interest expense.) To record depreciation.) Calculate the PV of the future minimum lease payments using any of the following methods: (1) factor tables, (2) a financial calculator, or (3) Excel functions. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 1,452.) Present Value $ eTextbook and Media List of Accounts Prepare an amortization schedule for Crane Limited for the lease term. Use Excel. (Hint: You may find the ROUND formula helpful for rounding in Excel.) (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 1,452.) Crane Limited (Lessee) Lease Amortization Schedule Annual Lease Payment Interest on Unpaid Obligation Reduction of Lease Obligation Balance of Lease Obligation Date 1/1/20 $ 1/1/20 $ $ 1/1/21 1/1/22 1/1/23 1/1/24 1/1/25 $ $ $ Prepare all of Crane's journal entries for 2020 to record the lease agreement and the lease payments. LeBlanc's accounting period ends on December 31. Ignore payments of insurance and property taxes. (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 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit 1/1/20 Right-of-Use Asset Lease Liability Cash (To record inception of lease and first lease payment.) 12/31/20 Depreciation Expense Accumulated Depreciation - Right-of-Use Asset (To record interest.) Interest Expense Lease Liability (To record depreciation expense.)