Accumulated depreciation (Bal. Sht)

Cash (Bal. Sht)

Deferred rent revenue (Bal. Sht)

Equipment (Bal. Sht)

Lease payable (Bal. Sht)

Lease receivable (Bal. Sht)

Note payable (Bal. Sht)

Prepaid service contract (Bal. Sht)

Right-of-Use asset (Bal. Sht)

Warehouse (Bal. Sht)

Amortization expense (Inc. Stmt)

Cost of goods sold (Inc. Stmt)

Gain on sale of warehouse (Inc. Stmt)

Interest expense (Inc. Stmt)

Interest revenue (Inc. Stmt)

Lease expense (Inc. Stmt)

Lease revenue (Inc. Stmt)

Misc. expenses (Inc. Stmt)

Rent revenue (Inc. Stmt)

Sales revenue (Inc. Stmt)

Problem 9. Lessor leases asset to Lessee on 1/1/2020. Lease term is 8 years. Lease payment is $97,580.60/year with the first payment due at the inception of the lease. Lessor's implicit rate is 12%/year and this rate is known by Lessee. Fair market value of leased asset is 5600,000. Remaining economic life of asset is 10 years. Lessee has the option to terminate the lease at the end of the 3rd year by paying an early termination fee of $200,000 Required 1. Record the lease in the Lessee's books on 1/1/2020. Assume that on 1/1/2020, it is reasonably certain that the Lessee will exercise the early termination option at the end of the 3rd year. Enter your entries below. Choose the account from the drop-down list in the yellow cell. Enter the amou Entries by Lessee at inception of lease on 1/1/2020: Account Debit Credit 2. Redo #1 assuming that on 1/1/2020, it is NOT reasonably certain that the Lessee will exercise the early termination option at the end of the 3rd year. Enter your entries below. Choose the account from the drop-down list in the yellow cell. Enter the amou Entries by Lessee at inception of lease on 1/1/2020: Account Debit Credit