Riverbed Leasing Company agrees to lease equipment to Marin Corporation on January 1, 2020. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. 2. The cost of the machinery is $561,000, and the fair value of the asset on January 1, 2020, is $763,000. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $55,000. Marin estimates that the expected residual value at the end of the lease term will be 55,000. Marin amortizes all of its leased equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on January 1, 2020. 5. The collectibility of the lease payments is probable. 6. Riverbed desires a 10% rate of return on its investments. Marin's incremental borrowing rate is 11%, and the lessor's implicit rate is unknown. (b) Your answer is partially correct. Prepare the journal entries, that Ivanhoe should record on December 31, 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation December 31, 2021 Amortization Expense Accumulated Depreciation-Right-of-Use Asset (To record amortization.) Interest Expense Lease Liability Cash (To record annual payment on lease liability.) Debit Credit 48976 15111 40889 48976 56000