LeBron James (LBJ) Corporation agrees on January 1,2025, to lease equipment from Sunland, Inc. for 3 years. The lease calls for annual lease payments of $15,000 at the beginning of each year. The lease does not transfer ownership, nor does it contain a bargain purchase option, and is not a specialized asset. In addition, the useful life of the equipment is 10 years, and the present value of the lease payments is less than 90% of the fair value of the equipment. Prepare LBJ's journal entries on January 1, 2025 (commencement of the operating lease), and on December 31, 2025. Assume the implicit rate used by the lessor is unknown, and LBS's incremental borrowing rate is 5%. (Credit occount titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select 'No Entry' for the account titles and enter O for the amounts. Uist all debit entries before credit entries. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimol places, es. 5,275. Record journal entries in the order presented in the problem.) Clickhere to view factor tables 1/1/25 Right-of-Use Asset 72365 Lease Liability 72365 (To record lease liability) 1/1/25 Lease Liability 15000 Cash (To record lease payment) 12/31/25 Lease Expense 15000 Right-of-Use Asset 22291 Lease Liability 3709 eTextbook and Media List of Accounts LeBron James (LBJ) Corporation agrees on January 1,2025, to lease equipment from Sunland, Inc. for 3 years. The lease calls for annual lease payments of $15,000 at the beginning of each year. The lease does not transfer ownership, nor does it contain a bargain purchase option, and is not a specialized asset. In addition, the useful life of the equipment is 10 years, and the present value of the lease payments is less than 90% of the fair value of the equipment. Prepare LBJ's journal entries on January 1, 2025 (commencement of the operating lease), and on December 31, 2025. Assume the implicit rate used by the lessor is unknown, and LBS's incremental borrowing rate is 5%. (Credit occount titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select 'No Entry' for the account titles and enter O for the amounts. Uist all debit entries before credit entries. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimol places, es. 5,275. Record journal entries in the order presented in the problem.) Clickhere to view factor tables 1/1/25 Right-of-Use Asset 72365 Lease Liability 72365 (To record lease liability) 1/1/25 Lease Liability 15000 Cash (To record lease payment) 12/31/25 Lease Expense 15000 Right-of-Use Asset 22291 Lease Liability 3709 eTextbook and Media List of Accounts
