On December $31,2024,$ Yard Art Landscaping leased a delivery truck from Branch Motors. Complete this question by entering your answers in the tabs below.

Req $1$ to $3$ and

$5$

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.

This lease should be classified by Yard Art as a

The amount that Yard Art would record as a right$-$of$-$use asset and a lease liability would be

This lease should be classified by Branch Motors as a

The amount that Branch Motors would record as sales revenue would be 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 $9,$Req $10,$Req$11]]$

Show how Branch Motors calculated the $$14,000$ annual lease payments.

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

$\backslash$table$[[$Lessor$\text{'}$s calculation of lease payments$],[$Amount to be recovered $($fair value$),],[$Less: Present value of the guaranteed residual value,$],[$Amount to be recovered through periodic lease payments,$$],[$Lease payments at the beginning of each of the next four years,$],[$Add: Maintenance costs,$],[$Lease payments including Maintenance costs,$]]\begin{array}{cc}\text{R}\text{e}\text{q}1to3\text{a}\text{n}\text{d}& 5\end{array},$ Req $4$

$$ Req $10$

Req $11$

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

Note: Round your intermediate and final answers to nearest whole dollar. Enter all amounts as positive values.

$\backslash$table$[[$Lessee$\text{'}$s Amortization Schedule$],[$December $31,$Payments,$\backslash$table$[[$Effective$],[$Interest$]],\backslash$table$[[$Decrease in$],[$Balance$]],\backslash$table$[[$Outstanding$],[$Balance$]]],[2024,,,,],[2024,,,,],[2025,,,,],[2026,,,,],[2027,,,,],[,$$$,0,$$$,$$$]]$ Complete this question by entering your answers in the tabs below.

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

Note: Round your intermediate and final answers to nearest whole dollar. Enter all amounts as positive values.

Branch paid $$36,000$ for the truck. Its retail value is $$52,673.$

The lease agreement specified annual payments of $$14,000$ beginning December $31,2024,$ the beginning of the lease, and at each December $31$ through $2027.$

Branch Motors$$ interest rate for determining payments was $11\%.$

At the end of the four$-$year lease term $($December $31,2028)$ the truck was expected to be worth $$12,000.$

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

Both companies use straight$-$line amortization or depreciation.

Yard Art guaranteed a residual value of $$5,000.$ Yard Art$$s incremental borrowing rate is $10\%$ and is unaware of Branch$$s implicit rate.

A $$1,000$ per year maintenance agreement was arranged for the truck with an outside service firm. As an expedient, Branch Motors agreed to pay this fee. It is$,$ however, reflected in the $$14,000$ lease payments.

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

Required:

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

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

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

Show how Branch Motors calculated the $$14,000$ 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$).$

Prepare the appropriate entries for both Yard Art and Branch Motors on December $31,2028($the end of the lease term$),$ assuming the truck is returned to the lessor, and the actual residual value of the truck was $$2,000$ on that date.