CraneInc. leased a new crane to Blue Construction under a 5-year, non-cancelable contract starting January 1, 2020. Terms of the lease require payments of $48,500 each January 1, starting January 1, 2020. The crane has an estimated life of 7 years, a fair value of $240,000, and a cost to Crane of $240,000. The estimated fair value of the crane is expected to be $40,000 (unguaranteed) at the end of the lease term. No bargain purchase or renewal options are included in the contract, and it is not a specialized asset. Both Crane and Blue adjust and close books annually at December 31. Collectibility of the lease payments is probable. Blues incremental borrowing rate is 10%, and Cranes implicit interest rate of 10% is known to Blue.

Prepare all the entries related to the lease contract and leased asset for the year 2020 for the lessee and lessor, assuming Blue uses straight-line amortization for all similar leased assets, and Crane depreciates the asset on a straight-line basis with a salvage value of $15,000. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25125 and the final answer to 0 decimal places e.g. 58,972.) Date Debit Credit Account Titles and Explanation Lessee's Entries 1/1/20 TRight-of-Use Asset Lease Liability (To record lease.) 1/1/20 TLease Liability 48500 Cash 48500 (To record lease payment.) 12/31/20 TLease Expense 00 000 Right-of-Use Asset Lease Liability (To record interest and amortization expense.) Lessor's Entries 1/1/2017 1/1/20 TCash 48500 48500 Unearned Lease Revenil (To record the receipt of payment.) 12/31/20 Depreciation Expense Accumulated Depreciation- (To record depreciation.) 12/31/20 Tunearned Lease Revenue Lease Revenue (To record lease revenue.)