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E21-17 (L03,4) (Accounting for an Operating Lease) relevant information related to the lease is as follows. On January 1, 2017, Nelson Co. leased a building

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E21-17 (L03,4) (Accounting for an Operating Lease) relevant information related to the lease is as follows. On January 1, 2017, Nelson Co. leased a building to Wise Inc. The 1. The lease arrangement is for 10 years. The building is expected to have a residual value at the end of the lease of $3,500,000 (unguaranteed) 2The leased building has a cost of $4,000,000 and was purchased for cash on January 1, 2017. 3. The building is depreciated on a straight-line basis. Its estimated economic life is 50 years with no salvage value. 4. Lease payments are $275,000 per year and are made at the beginning of the year. 5. Wise has an incremental borrowing rate of 8%, and the rate implicit in the lease is unknown to Wise. 6. Both the lessor and the lessee are on a calendar-year basis. Instructions (a) Prepare the journal entries that Nelson should make in 201:7. (b) Prepare the journal entries that Wise should make in 2017. (c) If Wise paid $30,000 to a real estate broker on January 1, 2017, as a fee for finding the lessor, how much should Wise report as an expense for this item in 2017

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