RECORDING CAPITAL AND OPERATING LEASES. Trippler Company has decided to lease its new office building. The following information is available for the lease:

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Lease: Payments Length of lease Economic life of building Appropriate interest rate: Cost of building if purchased $100,000 per year* 15 years 16 years 8.4% $875,000 "The first payment is due at the end of the first year of the lease. REQUIRED: 1. Determine whether this is a capital lease or an operating lease. 2. Regardless of your answer to the preceding question, assume that this is a capital lease and that the present value of the lease payments is $829,500. Record the lia- bility and corresponding asset for this acquisition. 3. Record the interest expense on the capital lease at the end of the first year. Also assume no residual value and a 15-year lease for the building. Record the first year's straight-line depreciation of the cost of the leased asset.