On January $1,2017,$ Bonnie Co$.$ leased a building to Clyde, Inc. The relevant information for the lease is as follows:

a$.$ The lease arrangement is for $10$ years. Bonnie expects the building to have a residual value at the end of the lease of $$3,500,000.$ Clyde has not guaranteed any of the residual value.

b$.$ The building had a cost of $$4,000,000$ and was purchased for cash on December $31,2016.$

c$.$ Both companies use straight line depreciation for their assets. The building has an estimated economic life of $50$ years with no salvage value.

d$.$ Lease payments of $$275,000$ are due at the beginning of each year.

e$.$ Clyde has an incremental borrowing rate of $8\%.$ It does not know the implicit rate Bonnie has priced into the lease.

f$.$ Both companies operate on a calendar$-$year basis.

Required:

$1.$ What implicit rate has Bonnie priced into the lease?

$2.$ Classify the lease for both Bonnie and Clyde.

$3.$ Make out the lessee$$s amortization table for the lease.

$4.$ Prepare the lease$-$related journal entries Bonnie must make up through $1/1/19.$

$5.$ Prepare the lease$-$related journal entries Clyde must make up through $1/1/19.$

$6.$ If Clyde paid $$30,000$ to a real estate broker on January $1,2017,$ as a fee for successfully finding a building to rent, how much would Clyde report as lease expense for $2017?$