Exercise 21A-17 a-c On January 1, 2017, Metlock Co. leased a building to Ivanhoe Inc. The relevant information related to the lease is as follows. 1. 2 3. The lease arrangement is for 10 years. The building is expected to have a residual value at the end of the lease of $3,600,000 (unguaranteed). The leased building has a cost of $4,100,000 and was purchased for cash on January 1, 2017 The building is depreciated on a straight-line basis. Its estimated economic life is 50 years with no salvage value. Lease payments are $265,000 per year and are made at the beginning of the year. Ivanhoe has an incremental borrowing rate of 5%, and the rate implicit in the lease is unknown to Ivanhoe, Both the lessor and the lessee are on a calendar-year basis. 4. 5. 6. Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Prepare the journal entries that Metlock should make in 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit 1/1/17 (To record cost of the building) (To record receipt of lease payment) 12/31/17 (To record the recognition of the revenue each period) (To record depreciation expense on the leased asset) Prepare the journal entries that Ivanhoe should make in 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to O decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit 1/1/17 (To record the lease) 1/1/17 (To record lease llability) 12/31/17 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT If Ivanhoe paid $20,000 to a real estate broker on January 1, 2017, as a fee for finding the lessor, what is the initial measurement of the right-of-use asset? Right-of-use asset