On September 1, 2020, Wildhorse Corporation, which uses ASPE, signed a 5-year, non cancellable lease for a piece of equipment. The terms of the lease called for Wildhorse to make annual payments of $12.960 at the beginning of each lease year, starting September 1, 2020. The equipment has an estimated useful life of 7 years and a $10,000 unguaranteed residual value and a fair value on September 1, 2020, of $96,000. The equipment reverts back to the lessor at the end of the lease term. Wildhorse uses the straight-line method of depreciation for all of its plant assets, has a calendar year end prepares adjusting journal entries at the end of the fiscal year, and does not use reversing entries. Wildhorse's incremental borrowing rate is 10%, and the lessor's implicit rate is unknown Click here to view the factor table PRESENT VALUE OF L. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE Debit Credit Account Titles and Explanation 62089 Lease Liability 6208 Cash 12960 Depreciation Expense 1296 Accumulated Depreciation-Right-of-Use Asset 10348 Interest Expense 1034 Interest Payable 12960 21 Lease Liability 1294 Cast