On January 1, 2020, Lessor Inc. leased equipment commonly used in the industry with a fair value of $ 30,000 to Lessee, Inc. The lease is for 9 months with no renewal or cancellation option. The remaining useful life of the asset is 1 year and the residual value is zero. At the end of the contract, Lessee, Inc. can purchase the asset at fair value on that date, otherwise the asset returns to the lessor. The first monthly payment of $ 3,000 was made on 1/1/2020. In the journal entry of 1/1/20 of the lessee (lessee) a

Select one: a. Net CR to Lease Payable for $ 27,000 b. a DR to Right of Use Asset for $ 30,000 c. DR to Prepaid Rent for $ 3,000 d. DR a lease Payable for $ 3,000

When the lessor computes the present value of the rent payments, this

Select one:

a. use the implicit interest rate if you know it, otherwise use the incremental borrowing rate.

b. use the "implicit interest rate" for all cases.

c. use the incremental borrowing rate for all cases.

d. use the lower of the incremental borrowing rate and the "implicit interest rate" as long as the lessee knows both.