B part

The City of Rochester signed a 30-year agreement with East Coast Real Estate, Inc. to lease a newly constructed building for city services. The cty agrees to make an initial payment of $2,500,000 and annual payments of $786,340 for the next 29 years. Using an assumed bomowing rate of 7 percent, the prosent value of the lease payments is appraximately $12,154,500. At the time the lease agreoment is signed, the building had an appraised market value of $13 million and an estimated life of 40years Required -1. Should the city consider this agreement a capital lease? O yes O No a-2. flowing crteria's in relation to decision making (Do not round intermediate Complete caloulations.Round your answers to 1 decimal place) of fair value of 2 Lease Yerm as a percentage of estimated uefui ie of building b. Provide journal entries the city should makse for both the capital projects fund and govemmental activities t, select "Ne Journal Entry Require" in the first account field) 1. Record the lease at Capital Projects Fund Expendtures MacBook Air 8584 2 4 6 7 ock K