On January 1, 2020, a machine was purchased for $960,000 by Larkspur Co. The machine is expected to have an 8-year life with no salvage value. It is to be depreciated on a straight-line basis. The machine was leased to Crane Inc. for 3 years on January 1, 2020, with annual rent payments of $285,000 due at the beginning of each year, starting January 1, 2020. The machine is expected to have a residual value at the end of the lease term of $562,500, though this amount is unguaranteed. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) Your answer is correct. How much should Larkspur report as income before income tax on this lease for 2020? Income before income tax $ 165000 Date Account Titles and Explanation Debit Credit 1/1/20 Right-of-Use Asset Lease Liability (To record the lease) 1/1/20 Lease Liability cash (To record lease payment) 12/31/20 Lease Liability On January 1, 2020, a machine was purchased for $960,000 by Larkspur Co. The machine is expected to have an 8-year life with no salvage value. It is to be depreciated on a straight-line basis. The machine was leased to Crane Inc. for 3 years on January 1, 2020, with annual rent payments of $285,000 due at the beginning of each year, starting January 1, 2020. The machine is expected to have a residual value at the end of the lease term of $562,500, though this amount is unguaranteed. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) Your answer is correct. How much should Larkspur report as income before income tax on this lease for 2020? Income before income tax $ 165000 Date Account Titles and Explanation Debit Credit 1/1/20 Right-of-Use Asset Lease Liability (To record the lease) 1/1/20 Lease Liability cash (To record lease payment) 12/31/20 Lease Liability