Teal MountainCompany leases an automobile with a fair value of $20,014from John Simon Motors, Inc., on the following terms:

1.Non-cancelable term of50months.

2.Rental of $410per month (at the beginning of each month).

3.Teal Mountainguarantees a residual value of $1,840. Delaney expects the probable residual value to be $1,840at the end of the lease term.

4.Estimated economic life of the automobile is60months.5.Teal Mountain's incremental borrowing rate is6% a year (0.5% a month). Simon's implicit rate is unknown.

What is the nature of this lease to Teal Mountain? The nature of this lease is a/an lease. 4} eTextbook and Media List of Accounts What is the present value of the lease payments to determine the lease liability? (Round answer to 0 decimal places, e.g. 5,275.) Present value of the lease payments $ Based on the original fact pattern, record the lease on Teal Mountain's books at the date of commencement. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit e Textbook and Media List of Accounts Record the first month's lease payment (at commencement of the lease). (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to O decimal places, e.g. 5,275.) Account Titles and Explanation Debit CreditRecord the second month's lease payment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to O decimal places, e.g. 5,275.) Account Titles and Explanation Debit Credit eTextbook and Media List of Accounts Record the first month's amortization on Teal Mountain's books (assume straight-line). (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 5,275.25.) Account Titles and Explanation Debit CreditSuppose that instead of $1,840, Teal Mountain expects the residual value to be only $500 (the guaranteed amount is still $1,840). How does the calculation ofthe present value of the lease payments change from pa rt (b)? (Round answer to 0 decimal places, 8.3. 5,275.) PV of lease payments $