BrambleCorporation leased equipment toMarin, Inc. on January 1, 2020. The lease agreement called for annual rental payments of $1,103at the beginning of each year of the3-year lease. The equipment has an economic useful life of7years, a fair value of $7,300, a book value of $5,300, andBrambleexpects a residual value of $4,800at the end of the lease term.Brambleset the lease payments with the intent of earning a5% return, thoughMarinis unaware of the rate implicit in the lease and has an incremental borrowing rate of7%. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature.

Question:

1.Prepare the entries forBramblefor 2020

2.How wouldBramble's accounting in part a change if it incurred legal fees of $500to execute the lease documents and $500in advertising expenses for the year in connection with the lease?