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On December 31, 2019, Larkspur Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Larkspur to make

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On December 31, 2019, Larkspur Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Larkspur to make annual payments of $9,399 at the beginning of each year of the lease, starting December 31, 2019. The machine has an estimated useful life of 6 years and a $4,700 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Larkspur uses the straight-line method of depreciation for all of its plant assets. Larkspur's incremental borrowing rate is 3%, and the lessor's implicit rate is unknown. Click here to view factor tables.

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