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Question $3$ of $5$

$\frac{0\mathrm{.}2}{1}$

On January $1,2025.$ Riverbed Company contracts to lease equipment for $5$ years, agreeing to make a payment of $$141,542$ at the beginning of each year, starting January $1,2025.$ The leased equipment is to be capitalized at $$632,000.$ The asset is to be amortized on a double$-$declining$-$balance basis, and the obligation is to be reduced on an effective$-$interest basis. Riverbed's incremental borrowing rate is $7\%,$ and the implicit rate in the lease is $6\%,$ which is known by Riverbed. Title to the equipment transfers to Riverbed at the end of the lease. The asset has an estimated useful life of $5$ years and no residual value.

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$($b$).$

$($c$)$

Prepare the journal entries to record amortization of the leased asset and interest expense for the year $2025.($Credit account titles are cutomatically indented when amount is entered. Do not indent manuolly if no entry is required, select $"$No Entry" for the account titles and enter $0$ for the amounts Round answers to $0$ decimal places, eg$.5,275.$ List all debit entries before credit entries$)$

Date Account Titles and Explanation

December $31,2025$

December $31,2025$

Debit

Amort$/$zatlon Expense

Rlght$-$of$-$Use Asset

$($To record amortization of the leased asset.$)$

Lease Llablity

$($To record interest on lease payment.$)$

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