Refer to the information in A18-9. Jeffrey Leasing Inc. is a public company. Jeffrey’s implicit interest rate in the Yvan lease is 6%.

Data From A18-9

On 2 January 20X4, Yvan Ltd., a public company, entered into a five-year equipment lease with Jeffery Leasing Inc. The lease calls for annual lease payments of $150,000, payable at the beginning of each lease year. Yvan’s IBR is 7%. Yvan does not know the lessor’s interest rate. The fair value of the equipment is $675,000. Yvan depreciates equipment on a straight-line basis, taking a full year’s depreciation in the year of acquisition.

Required:
1. Prepare the lease net receivable amortization schedule for Jeffrey.
2. Prepare the journal entries relating to the lease for Jeffrey for 20X4 and 20X5, using the net method of recording the leased asset.
3. Repeat requirement 2 using the gross method.