On January 1, 2020, Nelson Co. leased a building to Wise 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 $3,500,000 (unguaranteed).
2.		The leased building has a cost of $4,000,000 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 $275,000 per year and are made at the beginning of the year.
5.		Wise has an incremental borrowing rate of 8%, and the rate implicit in the lease is unknown to Wise.
6.		Both the lessor and the lessee are on a calendar-year basis.

Prepare the journal entries that Nelson should make in 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit 1/1/20 Buildings T 4 ,000,000 T 4,000,000 Cash (To record cost of the building) 1/1/20 Cash 275,000 Rent Receivable 275,000 (To record receipt of lease payment) 12/31/20 Lease Receivable 275,000 275,000 Lease Revenue (To record the recognition of the revenue each period) 12/31/20 Depreciation Expense TAccumulated Depreciation. (To record depreciation expense on the leased asset) Prepare the journal entries that Wise should make in 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to o decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit 1/1/20 Right-of-Use Asset Lease Liability (To record the lease) 1/1/20 V Lease Liability 275,000 Cash 275,000 (To record lease payment) 12/31/20 Lease Expense 275,000 Lease Liability Right-of-Use Asset If Wise paid $30,000 to a real estate broker on January 1, 2020, as a fee for finding the lessor, what is the initial measurement of the right-of-use asset? X Right-of-use asset 3000 Prepare the journal entries that Nelson should make in 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit 1/1/20 Buildings T 4 ,000,000 T 4,000,000 Cash (To record cost of the building) 1/1/20 Cash 275,000 Rent Receivable 275,000 (To record receipt of lease payment) 12/31/20 Lease Receivable 275,000 275,000 Lease Revenue (To record the recognition of the revenue each period) 12/31/20 Depreciation Expense TAccumulated Depreciation. (To record depreciation expense on the leased asset) Prepare the journal entries that Wise should make in 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to o decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit 1/1/20 Right-of-Use Asset Lease Liability (To record the lease) 1/1/20 V Lease Liability 275,000 Cash 275,000 (To record lease payment) 12/31/20 Lease Expense 275,000 Lease Liability Right-of-Use Asset If Wise paid $30,000 to a real estate broker on January 1, 2020, as a fee for finding the lessor, what is the initial measurement of the right-of-use asset? X Right-of-use asset 3000