Below is the lease amortization schedule for a noncancellable leased asset with a 12-year economic life. The lease requires 10 total rental payments which are made annually, beginning at lease commencement. The lease has no other provisions which may impact its classification or accounting.

Payment #	Lease Payment	Effective Interest	Decrease in Balance	Outstanding Balance
				135,180
1	20,000	0	20,000	115,180
2	20,000	11,518	8,482	106,698
3	20,000	10,670	9,330	97,368
4	20,000	9,737	10,263	87,105
5	20,000	8,711	11,289	75,816
6	20,000	7,582	12,418	63,398
7	20,000	6,340	13,660	49,738
8	20,000	4,974	15,026	34,712
9	20,000	?	?	?
10	20,000	?	?	?

23. What is the effective annual interest rate on the lease?

24. How would the Lessee classify the lease?

25. What is the Lessees Journal Entry to initially record entry into the lease?

26. How would the Lessor classify the lease?

27. What is the Lessors Journal Entry to initially record entry into the lease?

28. What is the Lessees annual amortization of the Right-of-Use Asset using the straight-line method?

29. What is the Lessees Journal Entry to record their 1^st rental payment made at the lease commencement date?

30. What is the Lessors Journal Entry to record the 1^st rental payment received at the lease commencement date?

31. What is the Lessees Journal Entry to record the 9^th rental payment made, and what is the balance of the Lease Liability at the end of that period?

32. What is the Lessors Journal Entry to record receipt of the 9^th rental payment, and what is the balance of their Lease Receivable at the end of that period?

33. What is the Lessees Lease Liability and the Lessors Lease Receivable after the 10^th rental payment is made by the Lessee and received by the Lessor?