Pronghorn Corporation leased equipment to Larkspur, Inc. on January 1, 2025. The lease agreement called for annual rental payments of $1,220 at the beginning of each year of the 3-year lease. The equipment has an economic useful life of 7 years, a fair value of $11,700, a book value of $9,700, and Pronghorn expects a residual value of $9,200 at the end of the lease term. Pronghorn set the lease payments with the intent of earning a 4% return, though Larkspur is unaware of the rate implicit in the lease and has an incremental borrowing rate of 6%. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) Determine the nature of the lease to both Pronghorn and Larkspur. The lease is a/an lease to Larkspur. The lease is a/an lease to Pronghorn. Prepare all necessary journal entries for Larkspur in 2025. Larkspur uses straight-line depreciation. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)