2. 3.(20 marks) On January 1, 2020, Kirk Corp. sells land to Spock Inc. for $ 2,000,000, and immediately leases the land back. Both companies follow ASPE. The following information relates to this transaction: 1. The term of the non-cancellable lease is 20 years and the title transfers to Kirk at the end of the lease term The land has a cost basis of $ 1,600,000 to Kirk. 3. The lease agreement calls for equal rental payments of $ 203,704 at the end of each year. 4. The land has a fair value of $ 2,000,000 on January 1, 2020. 5. The incremental borrowing rate of Kirk Corp. is 10%. Kirk is aware that Spock set the annual rentals to ensure a rate of return of 8%. 6. Kirk pays all executory costs, which total $ 170,000 in 2020. 7. Collectibility of the rentals is reasonably assured, and any unreimbursable costs under the lease that are likely to be incurred can be reasonably estimated by the lessor. Instructions a) Prepare all the 2020 journal entries on the books of Kirk Corp. to reflect the above sale and lease transactions (include a partial amortization schedule and round all amounts to the nearest dollar.) b) Prepare all the 2020 journal entries on the books of Spock Inc. to reflect the above purchase and lease transactions. Page Break