Question 3 1.84 View Policies Show Attempt History Current Attempt in Progress Indigo Incorporated leases a piece of equipment to Teal Mountain Corporation on January 1, 2020. The lease agreement called for annual rental payments of $5,758 at the beginning of each year of the 4-year lease. The equipment has an economic useful life of 6 years, a fair value of $27.200, a book value of $22,200, and both parties expect a residual value of $8,300 at the end of the lease term, though this amount is not guaranteed. Indigo set the lease payments with the intent of earning a 7% return, and Teal Mountain is aware of this rate. 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.) TEAL MOUNTAIN CORPORATION Lease Amortization Schedule Annuity-Due Basis Reduction of Interest on Liability Lease Liability Annual Payment Lease Liability ate J20 $ Lease Expense (Straight-Line) Lease Expense Schedule Interest on Lease Liability Amortization of ROU Asset Carrying Value ROU Asset Date 1/1/20 $ 12/31/20 12/31/21 12/31/22 12/31/23 Prepare the journal entries for Teal Mountain for 2020 and 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem Date Account Titles and Explanation Debit Credit (To record the lease) To record lease payment) Suppose Teal Mountain Incurs initial direct costs of $750 related to the lease. Prepare the journal entries for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit (To record the lease) (To record lease payment)