6 of 10 View Policies Show Attempt History Current Attempt in Progress > - Your answer is partially correct. 0.71/1 E III .. Novak Corporation leases equipment from Falls Company on January 1, 2020. The lease agreement does not transfer ownership, contain a bargain purchase option, and is not a specialized asset. It covers 3 years of the equipment's 8-year useful life, and the present value of the lease payments is less than 90% of the fair value of the asset leased. The annual lease payment is $30,000 at the beginning of each year, and Novak's incremental borrowing rate is 9%, which is the same as the lessor's implicit rate. Prepare all the necessary journal entries for Falls Company (the lessor) for 2020, assuming the equipment is carried at a cost of $168,000. Falls uses straight-line depreciation and the leased asset has zero residual value at the end of its useful life. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation 1/1/20 Cash Unearned Lease Revenue Debit 111517 Credit 111517 Date Account Titles and Explanation Debit 1/1/20 Cash Unearned Lease Revenue 12/31/20 Unearned Lease Revenue 12/31/20 Lease Revenue (To record the recognition of the revenue each period) Depreciation Expense Accumulated Depreciation-Leased Equipment (To record depreciation expense on the leased equipment) 111517 Credit 111517