1. Determine the value of the right to use asset and lease liability at commencement of the lease.

Operating Lease, No Lessee Guaranteed Residual Value, Lessee. Beachmont Restaurants, Inc. enters into a lease for standard stoves and grills. The lease term is 3 years with no renewal or purchase options. There is no residual value guarantee, and the lease terms do not provide for a transfer of title. The economic life Of the asset is 10 years. According to the ternts Of the lease contract. Beachmont is required to pay rentals of $700 for the first year with payments increasing by per year for Years 2 and 3. All lease payments are made on January I. The implicit rate in the lease is 6%. The fair value of the asset is $9,000. Beachmont knows the lessor's implicit rate. Beachmonts fiscal year ends on December 31.