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Larkspur Corporation recorded a right-of-use asset for $410,400 as a result of a finance lease on December 31, 2024. Larkspur's incremental borrowing rate is 10%, and the implicit rate of the lessor was not known at the commencement of the lease. Larkspur made the first lease payment of $64,784 on December 31, 2024. The lease requires 9 annual payments. The equipment has a useful life of 9 years with no residual value. Prepare Larkspur's December 31, 2025, entries. (List all debit entries before credit entries. 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. Round answers to 0 decimal places e.g. 5,275.) Date December 31, 2025 December 31, 2025 Account Titles and Explanation (To record lease payment) (To record amortization of the right-of-use asset) Debit Credit [[ [I

Larkspur Corporation recorded a right-of-use asset for $410,400 as a result of a finance lease on December 31, 2024. Larkspur's incremental borrowing rate is 10%, and the implicit rate of the lessor was not known at the commencement of the lease. Larkspur made the first lease payment of $64,784 on December 31, 2024. The lease requires 9 annual payments. The equipment has a useful life of 9 years with no residual value. Prepare Larkspur's December 31, 2025, entries. (List all debit entries before credit entries. 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. Round answers to 0 decimal places e.g. 5,275.) Date December 31, 2025 December 31, 2025 Account Titles and Explanation (To record lease payment) (To record amortization of the right-of-use asset) Debit Credit [[ [I

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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**Finance Lease Accounting: A Case Study of Larkspur Corporation** Larkspur Corporation recorded a right-of-use asset valued at $410,400 as a part of a finance lease on December 31, 2024. The incremental borrowing rate is set at 10%, and the implicit rate of the lessor was unknown at the lease’s commencement. The initial lease payment of $64,784 was made on December 31, 2024. The lease arrangement requires nine annual payments for equipment that has a useful life of nine years with no residual value. **Objective**: Prepare Larkspur's lease accounting entries for December 31, 2025. This involves the recording of lease payments and the amortization of the right-of-use asset. **Instructions**: 1. List all debit entries before credit entries. 2. Credit account titles are to be automatically indented when amounts are entered; no manual indentation needed. 3. If no entry is necessary, select "No Entry" and enter 0 for the amounts. 4. Round all numerical answers to 0 decimal places (e.g., 5,275). **Account Entries for December 31, 2025**: | Date | Account Titles and Explanation | Debit | Credit | |--------------------|---------------------------------------------------------------------|-------|--------| | December 31, 2025 | | | | | | | | | | | (To record lease payment) | | | | December 31, 2025 | | | | | | | | | | | (To record amortization of the right-of-use asset) | | | This section provides the structured format for recording and reflecting lease payments and asset amortization in corporate financial statements.
Transcribed Image Text:**Finance Lease Accounting: A Case Study of Larkspur Corporation** Larkspur Corporation recorded a right-of-use asset valued at $410,400 as a part of a finance lease on December 31, 2024. The incremental borrowing rate is set at 10%, and the implicit rate of the lessor was unknown at the lease’s commencement. The initial lease payment of $64,784 was made on December 31, 2024. The lease arrangement requires nine annual payments for equipment that has a useful life of nine years with no residual value. **Objective**: Prepare Larkspur's lease accounting entries for December 31, 2025. This involves the recording of lease payments and the amortization of the right-of-use asset. **Instructions**: 1. List all debit entries before credit entries. 2. Credit account titles are to be automatically indented when amounts are entered; no manual indentation needed. 3. If no entry is necessary, select "No Entry" and enter 0 for the amounts. 4. Round all numerical answers to 0 decimal places (e.g., 5,275). **Account Entries for December 31, 2025**: | Date | Account Titles and Explanation | Debit | Credit | |--------------------|---------------------------------------------------------------------|-------|--------| | December 31, 2025 | | | | | | | | | | | (To record lease payment) | | | | December 31, 2025 | | | | | | | | | | | (To record amortization of the right-of-use asset) | | | This section provides the structured format for recording and reflecting lease payments and asset amortization in corporate financial statements.
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