On Jan. 1, 2021, Klobuchar Corporation, which uses IFRS, signs a 10-year, non-cancellable lease agreement to lease a specialty lathe from View Inc. The following concerns the lease agreement.

1. The agreement requires equal rental payments of $93,580 beginning on January 1, 2021.

2. The lathe's fair value on January 1, 2021, is $480,000.

3. The lathe has an estimated economic life of 12 years, with an unguaranteed residual value of $12,000. Klobuchar Corporation depreciates similar equipment using the straight-line method.

4. The lease is non-renewable. At the termination of the lease, the lathe reverts to the lessor.

5. Klobuchar Corporations incremental borrowing rate is 12% per year. The lessor's implicit rate is not known by Klobuchar Corporation.

6. The yearly rental payment includes $12,470.29 of executory costs related to insurance on the lathe.

7. The Present Value (Right-of-Use-Asset amount) of the lease payments at 12% is $480,000

Instructions a) Prepare the initial entry to reflect the signing of the lease agreement.

b) Prepare an amortization schedule for the first 3 years of the lease to be used by Klobuchar Corporation. Round to the nearest cent. Date Annual Pmt. Excl. Exec. Costs Interest (12%) on Unpaid Liability Reduction of Lease Liability Balance of Lease Liability

c) Prepare the journal entries on Klobuchar Corp.'s books to record the payments and expenses related to this lease for the years 2021 and 2022 as well as any adjusting journal entries at its fiscal year ends of December 31, 2021 and 20221 Klobuchar does not use reversing entries.