1. AssumeAmerican Airlines (AA) enters a three-year operating lease for a boing 737-800. AA agrees to pay $10 million at the beginning of each year in order to be granted the right to use the aircraft. Assume the weighted-average discount rate is 4.6%.
   1. Prepare the amortization schedule and journal entries for AA under both the ASC 840 and the ASU 2016-02 (ignore Exhibits 4 and 5a-b, focus on what you learned in class).
   2. What are the effects of transitioning from the old rule to the new rule on cash flows and net income (for this transaction only) over the four years?
   3. In 2018, how does the ASU 2016-02 affect AA's assets, debt, debt-to-equity ratio, and ROA (see Exhibits 1a and 1b)?