On January 1, 2020, Kingbird Co. leased a building to Blossom Inc. The relevant information related to
Question:
On January 1, 2020, Kingbird Co. leased a building to Blossom Inc. The relevant information related to the lease is as follows.
1.The lease arrangement is for 10 years. The building is expected to have a residual value at the end of the lease of $2,500,000 (unguaranteed).2.The leased building has a cost of $3,000,000 and was purchased for cash on January 1, 2020.3.The building is depreciated on a straight-line basis. Its estimated economic life is 50 years with no salvage value.4.Lease payments are $255,000 per year and are made at the beginning of the year.5.Blossom has an incremental borrowing rate of 7%, and the rate implicit in the lease is unknown to Blossom.6.Both the lessor and the lessee are on a calendar-year basis.
a. Prepare the journal entries that Kingbird should make in 2020.
b.Prepare the journal entries that Blossom should make in 2020
c.if wise paid 20,000 to a real estate broker on january 1,2020 as fee for finding the lessor, what is the initial measurement of the lessee are on on a canlendar-year basic