On January 1, 2016, Trenton Company entered a lease to rent office space. The lease requires Trenton to pay $290,000 per year, at the beginning of each year, for 8 years. The lease is non-cancellable and non-renewable. The building's estimated useful life is 30 years, and its current fair value is estimated to be 54 million. Trenton's incremental borrowing rate is 15%. Requirement Classify this lease for Trenton Company and record the journal entries for the first year of the lease. Start by determining the present value (PV) of minimum lease payments (MLP). Then, calculate the percentage of the PV of MLP compared to the fair value of the leased asset. (Use a financial calculator for all present value computations. Enter all currency values as positive amounts rounded to the nearest whole dollar. Do not enter amounts in millions. Round the percentage to the nearest whole percent.) PV of MLP Fair value of asset PV of MLP as % of fair value Determine the appropriate classification for this lease for Trenton. Trenton should classify this lease as V lease because the PV of MLP as a percent of fair value is Record the journal entries for Trenton for the first year of the lease. (Record debits first, then credits. Explanations are not required.) Begin by preparing the required entry on January 1, 2016. Date Accounts Debit Credit Jan, 1 2016 Now prepare the required entry on December 31, 2016. Date Accounts Debit Credit Dec 31 2016