Answer all three parts of this question, and format entries

appropriately.

a. Identify the three leases as either operating or capital leases, and

explain your answer.

b. Record the initial journal entry for any of the above that are capital

leases.

c. Record the journal entry for any of the above that are operating leases.

Below are three lease transactions for VNN Airways in 20XX as the Lessee.

All leases start on 1/1/XX.

Lessors

BJN CMN BVC

Type of property 787 Aircraft 727 Aircraft L-1011 Aircraft

Yearly Rental $7,445,064 $5,449,423 $2,851,861

Lease Term 15 years 15 years 20 years

Estimated econ. life 25 years 25 years 25 years

Fair Mkt Val. of leased asset $69,300,000 $54,000,000 $32,000,000

Present Va. of Rent. PMTS $63,000,000 $46,000,000 $28,000,000

Purchase price at end of lease $15,000,000 $9,000,000 $7,000,000