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BrazilCos Restaurant Lease On 1/1/X1, Prestos Brazilian subsidiary, BrazilCo, leases a vacant restaurant in Brasilia for a 5-year term with fixed payments amounting to the

BrazilCos Restaurant Lease On 1/1/X1, Prestos Brazilian subsidiary, BrazilCo, leases a vacant restaurant in

Brasilia for a 5-year term with fixed payments amounting to the equivalent of $100,000 USD per year in year 1,

$150,000 in years 2 and 3, and $200,000 in years 4 and 5. BrazilCos incremental borrowing rate is 6%. Assume the

restaurants useful life is 20 years

-Show how this lease would be initially reported on the balance sheet, and show how the lease would flow

through the income statement on 12/31/X1 and 12/31/X2 in BrazilCos subsidiary-level financial statements

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