I just want answer to part 3 of this question?

You are Janet Wilt, CPA. The president of one of your clients, Boarshead Corporation, a small private company, emailed you the following message on January 12, 2022: Janet, I was at a conference today and they were talking about the new lease regulation and how that may impact our financial statements. I know that we have a couple of leases, one that we record as a liability and one that we do not. How will this new lease requirement impact us? When does this go into effect? Will we need to make adjustments to our 2021 financial statements for the new regulation? If so, what are they and when do we need to record them? What do we need to do to implement this change? Don Collizi President, Boarshead Corporation Upon investigation of Boarsheads records, you found that Boarshead had had two leases. One that is currently being accounted for as a capital lease and one being treated as an operating lease (under the old standard). The capital lease was for equipment. The lease started in 2019 and was a 5-year lease of annual lease payments of $50,000, starting on January 1, 2019. The lease also had a bargain purchase option for $20,000 at the end of the lease. The equipment had a useful life of 6 years and Boarshead uses the straight-line method of depreciation. The implicit interest rate for this lease was 6%. The operating lease was a 15-year lease for their facilities that started on January 1, 2015. The lease consisted of annual rental payments, starting on January 1, 2016 of $60,000. When they started the lease in 2015, they expected useful life of the facility was 30 years. Boarshead imputed interest rate is 8%. You also found that the January 1, 2022 payments for both leases were made on December 28, 2021. Required: Reply to Don Collizi. Write a memo or letter (use proper format for a letter or memo) to Don explaining the new lease requirements as they apply to Boarshead. Be sure to include the following: 1. Explain the transition rules (what will need to be done to adopt the new standard). Be sure to include adoption dates. 2. Assuming that Boarshead adopt ASU 2016-2 in 2021, what liabilities and assets will need to be reported in the 2020 and 2021 comparative balance sheet? What would be reported on the 2021 income statement related to the two leases? 3. Assuming adoption in 2021, what journal entries will need to be made in 2021 for the transition to the new lease standard? (Assume that Boarshead used old accounting standards up until end of 2021.

Both payments that are due on January 1, 2022 were paid on December 28, 2021 and were recorded under the old standard. What entries will need to be made on December 31, 2021 to bring the records up to date and in compliance with ASU 2016-2.) 4. In 2021, what entries will need to be recorded to record the payments of the leases and any year-end adjusting entries related to the lease and lease asset? (Again assume that payment for January 1, 2022 is made in late December, before the January 1, 2022 due date.) Show your client the entries that will be made when the payments are made and any year-end adjusting entry that is needed. Attach to your memo any supporting documentation. For example, in requirement 2, you need tell the client the amount of the liabilities and assets to be reported in the 2020 and 2021 balance sheet. In the memo you would communicate the amount, but you should also attach a supporting document showing the calculations. Part three and four ask for journal entries. Each of those entries have supporting calculations that come from an amortization table. So, you would want to show those supporting calculations on the supporting documents. So, you will have a memo and a spreadsheet showing your supporting calculation. Be sure that all supporting calculations are in good format.