FACTS: FACTS: LSE Corp enters into a lease of manufacturing equipment with Lessor Corp on January 1, 20X1 with the following terms: Lease term 3 years (economic life of the asset 6 years. Lease payments of $500 are made annually with the first payment made at lease commencement. LSE Corps incremental borrowing rate is 6%. Title to the asset does not transfer upon lease expiration. The fair value of the equipment is $30,000. LSE Corp does not guarantee the residual value of the equipment at the end of the lease term. LSE Corp pays for all maintenance of the equipment separate from the lease. There are no initial direct costs incurred by LSE Corp, and Lessor Corp does not provide any incentives.

Why is this an operating lease?

Provide the Day 1 entries (lease inception), and show calculations. An attached excel file is fine.

Build an amortization schedule for the lease term

Provide the Day 2 entries which would include the amortization of the right to use, and the 2^nd lease payment.