Norway Corporation leases equipment from Nova Scotia Company on January 1, 2017. The lease agreement does not transfer ownership, contain a bargain purchase option, and is not a specialized asset. It covers 4 years of the equipments 8-year useful life, and the present value of the lease payments is less than 90% of the fair value of the asset leased.Prepare Norways journal entries on January 1, 2017, and December 31, 2017. Assume the annual lease payment is $25,000 at the beginning of each year, and Norways incremental borrowing rate is 7%, which is the same as the lessors implicit rate. (hint: operating lease. 1/1/17 is lease inception and first lease payment. 12/31/17 is lease expense)

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