Exercise 1: On January 2, 2018, Gold Star Leasing Company leases equipment to Brick Co. with 5 equal annual payments of $160,000 each, payable beginning January 2, 2018. Brick Co. agrees to guarantee the $100,000 residual value of the asset at the end of the lease term. Brick's incremental borrowing rate is 10%, however it knows that Gold Star's implicit interest rate is 8%. What journal entry would Gold Star make at January 2, 2018 assuming this is a direct-financing lease? PV Annuity Due P V Ordinary Annuity PV Single Sum 4.31213 8%, 5 periods 68508 3.99271 10%, 5 periods 4.16986 3.79079 62092 Prepare the journal entry Gold Star would make on January 2, 2018 assuming this is a direct-financing lease. Exercise 2 On January 2, 2018 Gold Star Leasing Company leases equipment to Brick Co. With 5 equal annual payments of $160,000 each, payable beginning January 2 2018. Brick Co, agrees to guarantee the $100,000 residual value of the asset at the end of the lease term. Brick's incremental borrowing rate Focus