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Teal Mountain Company leases an automobile with a fair value of $15,005 from John Simon Motors, Inc, on the following terms: 1. Non-cancelable term of 50 months. 2. Rental of $300 per month (at the beginning of each month). (The present value at 0.5% per month is $13,310.) 3. Teal Mountain guarantees a residual value of $1,800 (the present value at 0,5% per month is $1,403 ). Teal Mountain expects . the probable residual value to be $1,800 at the end of the lease term. 4. Estimated economic life of the automobile is 60 months. 5. Teal Mountain's incremental borrowing rate is 6% a year (0.5\% a month). Simon's implicit rate is unknown. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) Your answer is correct. What is the nature of this lease to Teal Mountain? What is the present value of the lease payments to determine the lease liability? (Round answer to 0 decimal ploces, eg. 5,275. ) Present value of the lease payments eTextbook and Media List of Accounts Attempts: 1 of 3 used (c) Your answer is incorrect. Based on the original fact pattern, record the lease on Teal Mountain's books at the date of commencement. (Credit occount titles are automatically indented when amount is entered. Do not indent manually.)

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