BlossomCorp. agreed to lease property fromWaterwayCorp. effective January 1, 2020, for an annual payment of $24,201, beginning January 1, 2020. The property is made up of land with a fair value of $118,000and a two-storey office building with a fair value of $172,000and a useful life of25years with no residual value. The implicit interest rate is7.5%, the lease term is25years, and title to the property will not be transferred toBlossomby the end of the lease term. Assume that there is also no bargain purchase option, but that the lease does meet other criteria to qualify as a capital lease. BothBlossomandWaterwayuse ASPE. Prepare the required entries made byBlossomCorp. on January 1, 2020, and at its year end of December 31, 2020.

(To record first lease payment.)

choose a transaction date

Jan. 1

Dec. 31

enter an account title to record interest

enter a debit amount

enter a credit amount

enter an account title to record interest

enter a debit amount

enter a credit amount

(To record interest.)

choose a transaction date

Jan. 1

Dec. 31

enter an account title to record depreciation expense

enter a debit amount

enter a credit amount

enter an account title to record depreciation expense

enter a debit amount

enter a credit amount

(To record depreciation expense.)