Practice Exercise 21A-5 a-c On January 1, 2017, Larkspur Co. leased a building to Crane Corp. The relevant information related to the lease is as follows 1. The lease arrangement is for 5 years. The building is expected to have a residual value at the end of the lease of $2,400,000 (unguaranteed). 2. The leased building has a cost of $2,520,000 and was purchased for cash on January 1, 2017 d of The building is depreciated on a straight-line basis. Its estimated economic life is 30 years with no salvage value. 4. Lease payments are $290,000 per year and are made at the beginning of the year. 5, Crane has an incremental borrowing rate of 5%, and the rate implicit in the lease is unknown to Crane. 6. Both Larkspur and Crane are on a calendar-year basis. Prepare the journal entries that Larkspur Co. should make in 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Date Debit Credit To record cost of the building) To record receipt of lease payment) 12/31/17 To record the recognition of the revenue each period) (To record depreciation expense on the leased asset) Prepare the journal entries that Crane Corp. should make in 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit To record the lease) To record lease liability) 12/31/17 If Crane paid $35,000 to a real estate broker on January 1, 2017, as a fee for finding the lessor, how much of that amount should Crane Corp. report as an expense in 2017? Expense should be reported Practice Exercise 21A-5 a-c On January 1, 2017, Larkspur Co. leased a building to Crane Corp. The relevant information related to the lease is as follows 1. The lease arrangement is for 5 years. The building is expected to have a residual value at the end of the lease of $2,400,000 (unguaranteed). 2. The leased building has a cost of $2,520,000 and was purchased for cash on January 1, 2017 d of The building is depreciated on a straight-line basis. Its estimated economic life is 30 years with no salvage value. 4. Lease payments are $290,000 per year and are made at the beginning of the year. 5, Crane has an incremental borrowing rate of 5%, and the rate implicit in the lease is unknown to Crane. 6. Both Larkspur and Crane are on a calendar-year basis. Prepare the journal entries that Larkspur Co. should make in 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Date Debit Credit To record cost of the building) To record receipt of lease payment) 12/31/17 To record the recognition of the revenue each period) (To record depreciation expense on the leased asset) Prepare the journal entries that Crane Corp. should make in 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit To record the lease) To record lease liability) 12/31/17 If Crane paid $35,000 to a real estate broker on January 1, 2017, as a fee for finding the lessor, how much of that amount should Crane Corp. report as an expense in 2017? Expense should be reported