Ch 10 homework Wet Paint Company signed a ten-year lease agreement on January 1,2017 The lease requires payments of $65,000 per year every December 31. Wet Paint estimates that the leased property has a life of 11 years. The interest rate that applies to the lease is 12%. 5 REQUIRED: 6 1. Should Wet Pain Company treat the lease as an operating lease or a capital lease, and why? 2. If a balance sheet is presented on Jan 1, 2017, what amounts related to the lease will appear 7 on the balance sheet? 3. Assume that the leased asset is depreciated using the straight-line method and the lease is amortized using the effective interest method. What journal entries should Wet Paint make on 8 December 31, 2017