On January 1, 2020, Larkspur Co. leased a building to Crane Inc. The relevant information related to the lease is as follows. 1. 2. 3. The lease arrangement is for 10 years. The building is expected to have a residual value at the end of the lease of $3,400,000 (unguaranteed). The leased building has a cost of $3,900,000 and was purchased for cash on January 1, 2020. The building is depreciated on a straight-line basis. Its estimated economic life is 50 years with no salvage value. payments are $250,000 per year and are made at the beginning of the year. Crane has an incremental borrowing rate of 6%, and the rate implicit in the lease is unknown to Crane. Both the lessor and the lessee are on a calendar-year basis. 5. 6. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Prepare the journal entries that Larkspur should make in 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Debit Credit Date 1/1/20 Account Titles and Explanation Buildings 3900000 o cash 3900000 1/1/20 (To record cost of the building) cash 250000 12/31/20 Unearned Lease Revenu (To record receipt of lease payment) Unearned Lease Revenue T Lease Revenue (To record the recognition of the revenue each period) Depreciation Expense 250000 112/31/20 780007 78000 T Accumulated Depreciati (To record depreciation expense on the leased asset) Click if you would like to Show Work for this question: Open Show Work Prepare the journal entries that Crane should make in 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to o decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit 1/1/20 TRight-of-Use Asset 19504237 19504231 T Lease Liability (To record the lease) M Lease Liability 1/1/20 250000 o cash 250000 (To record lease payment) Lease Expense 12/31/20 T 250000 Lease Liability 102025 Right-of-Use Asset 147975 Click if you would like to Show Work for this question: Open Show Work If Crane paid $40,000 to a real estate broker on January 1, 2020, as a fee for finding the lessor, what is the initial measurement of the right-of-use asset? Right-of-use assets Click if you would like to Show Work for this question: Open Show Work