Branif Leasing leases mechanical equipment to industrial consumers under sales$-$type leases that earn Branif a $10\%$ rate of return for providing long$-$term financing. A lease agreement with Branson Construction specified $20$ annual payments beginning December $31,2024,$ the beginning of the lease.

The estimated useful life of the leased equipment is $20$ years with no residual value.

Its cost to Branif was $$1,685,686.$

The lease qualifies as a finance lease to Branson.

Maintenance of the equipment was contracted for through a $20-$year service agreement with Midway Service Company requiring $20$ annual payments of $$4,000$ beginning December $31,2024.$

Progressive insurance Company charges Branif $$4,000$ annually for hazard insurance coverage on the equipment.

Both companies use straight$-$line depreciation or amortization.

Note: Use tables, Excel, or a financial calculator. $($FV of $$1,$ PV of $$1,$ FVA of $$1,$ PVA of $$1,$ FVAD of $$1$ and PVAD of $$1).$

Required:

Prepare the appropriate entries for both the lessee and lessor to record the second lease payment and depreciation on December $31,2025,$ under each of three independent assumptions:

The lessee pays maintenance costs as incurred. The lessor pays insurance premiums as incurred. The lease agreement requires annual payments of $$180,000.$

The contract specifies that the lessor pays maintenance costs as incurred. The lessee$$s lease payments were increased to $$184,000$ to include an amount sufficient to reimburse these costs.

The lessee$$s lease payments of $$184,000$ included $$4,000$ for hazard insurance on the equipment rather than maintenance.

PLEASE COMPLETE ALL $3$ REQUIREMENTS FOR LESSEE AND LESSOR!