Exercise 20-3 The following facts are for a non-cancellable lease agreement between Blossom Corporation and Russell Corporation, a lessee: Inception date July 1, 2017 Annual lease payment due at the beginning of each year, starting July 1, 2017 $ 19,447.50 Purchase option price at end of lease term reasonably certain to be exercised by Russell $ 3,700 Lease term 5 years Economic life of leased equipment 10 years Lessor's cost 48,800 Fair value of asset at July 1, 2017 89,600 Lessor's implicit rate 6% Lessee's incremental borrowing rate 6% The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties about costs that have not yet been incurred by the lessor. The lessee assumes responsibility for all executory costs. Both Russell and Blossom use IFRS 16. Click here to view the factor table. Calculate the amount of the right-of-use asset and lease liability. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 2 decimal places, e.g. 52.75.) Amounts Prepare a lease amortization schedule for the lease obligation for Russell Corporation for the five-year lease term. (Round answers to 2 decimal places, e.g. 52.75.) Russell Corporation (Lessee) Lease Amortization Schedule Annual Lease Interest (6%) Reduction of on Unpaid Lease Plus BPO Obligation Obligation Date Balance of Lease Obligation 7/1/17 7/1/18 7/1/19 7/1/20 7/1/21 6/30/22 Prepare the journal entries on the lessee's books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2017 and 2018. Russell's annual accounting period ends on December 31, and Russell does not use reversing entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 52.75.) Date Account Titles and Explanation Debit Credit 7/1/17 12/31/17 (To record accrued interest) 12/31/17 (To record depreciation) 7/1/2018 (To record lease payment)