Concord Corporation leased equipment to Skysong, Inc. on January 1, 2020. The lease agreement called for annual rental payments of $1,342 at the beginning of each year of the 3-year lease. The equipment has an economic useful life of 7 years, a fair value of $9,400, a book value of $7,400, and Concord expects a residual value of $6,900 at the end of the lease term. Concord set the lease payments with the intent of earning a 7% return, though Skysong is unaware of the rate implicit in the lease and has an incremental borrowing rate of 9%. 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. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) Your answer is correct. Determine the nature of the lease to both Concord and Skysong. The lease is a/an operating lease to Skysong. The lease is a/an operating lease to Concord. (b) Your answer is correct. Prepare all necessary journal entries for Skysong in 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit 1/1/20 Right-of-Use Asset 3703 Lease Liability 3703 (To record the lease) 1/1/20 Lease Liability 1342 Cash 1342 (To record lease payment) 12/31/20 Lease Expense 1342 Lease Liability 212 Right-of-Use Asset 1130 (c) How would the measurement of the lease liability and right-of-use asset be affected if, as a result of the lease contract, Skysong was also required to pay $600 in commissions, prepay $800 in addition to the first rental payment, and pay $200 of insurance each year? (Round answers to O decimal places, e.g. 5,275.) Lease liability $ Right-of-use-asset $