Exercise 5-20 (Algo) Capital Assets Acquired under Lease Agreements [LO 5-2] The City of Clear Lake signed a lease agreement with Mountainside Builders whereby Mountainside will construct a new office building for city administrative use and lease it to the City for 30 years. The City has agreed to make an initial payment of $1,507,808 and annual payments in the same amount for the next 29 years. At a 6 percent discount rate, the present value of the lease payments totals $22 million. Upon completion, the building had an appraised value of $14 million and an estimated useful life of 40 years. Required Provide the journal entries the city should make in both the capital projects fund general journal and the governmental activities general journal to record the lease at the date of inception. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in whole dollars, not in millions.) Which financial statement(s) prepared at the end of the first year would show both the asset and the liability related to this capital lease? multiple choice 1 Government wide statements of comprehensive income Government wide statements of net position Government wide statements of profit or loss Government wide statements of revenue and expenditure Would the accounting for the lease change if the lease included a cancellation clause? multiple choice 2 Yes No