On December $31,2024,$ Yard Art Landscaping leased a delivery truck from Branch Motors.

Branch paid $$40,000$ for the truck. Its retail value is $$98,099$

The lease agreement specified annual payments of $$26,000$ beginning December $31,2024,$ the beginning of the lease, and at each December $31$ through $2027.$

Branch Motors' interest rate for determining payments was $10\%$

At the end of the four$-$year lease term $($December $31,2028)$ the truck was expected to be worth $$16,000$

The estimated useful life of the truck is five years with no salvage value.

Yard Art guaras use straight$-$line amortization or depreciation.

A $$1,000$ per year a residual value of $$6,000$ Yard Art's incremental borrowing rate is $10\%$ and is unaware of Branch's implicit rate

Note: Use tables, Excel, or a financial calculator. $($FV of $$1,$ PV of $$1,$ FVA of $$1,$ PVA of $$1,$ FVAD or $$1$ and PVAD of $$1)$

Required:

How should this lease be classified by Yard Art Landscaping $($the lessee$)?$

Calculate the amount Yard Art Landscaping would record as a night$-$of$-$use asset and a lease liability

How should this lease be classified by Branch Motors $($the lessor$)?$

Show how Branch Motors calculated the $$26,000$ annual lease payments

Calculate the amount Branch Motors would record as sales revenue.

Prepare the appropriate entries for both Yard Art and Branch Motors on December $31,2024$

Prepare an amortization schedule that describes the pattern of interest expense over the lease term for Yard Art

Prepare an amortization schedule that describes the pattern of interest revenue over the lease term for Branch Motors

Prepare the appropriate entries for both Yard Art and Branch Motors on December $31,2025.$

Prepare the appropriate entries for both Yard Art and Branch Motors on December $31,2027($the final lease payment$)$

Complete this question by entering your answers in the tabs below.

$\backslash$table$[[\backslash$table$[[$Req $1$ to $3$ and$],[5]],$Req $4,$Req $6,$Req $7,$Req $8,$Req$9,$Req$10,$Req $11]]$

How should this lease be classified by Yard Art Landscaping $($the lessee$)?$

Calculate the amount Yard Art Landscaping would record as a right$-$of$-$use asset and a lease liability.

How should this lease be classified by Branch Motors $($the lessor$)?$

Calculate the amount Branch Motors would record as sales revenue.

Note: Round your intermediate and final answers to nearest whole dollar.

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$\backslash$table$[[1.$ This lease should be classified by Yard Art as a$,],[2.$ The amount that Yard Art would record as a right$-$of$-$use asset and a lease liability would be$,],[3.$ This lease should be classified by Branch Motors as a$,],[5.$ The amount that Branch Motors would record as sales revenue would be$,]]$