On January 1, 2020, Northern Edison Company leased equipment to QuickStream Electric Company under a nine-year lease arrangement. Northern Edison seeks a 10% return on its lease investments. The agreement specifies annual payments of $25 million beginning January 1, 2020, and at each January 1 thereafter through 2028. The PV of the nine required payments is $172.5 million and the FV of the leased equipment is $195 million as of January 1, 2020. The equipment had been manufactured by Northern Edison for $180 million and is expected to have a useful life of 11 years with no salvage value. Because the lease term is only for nine years, the equipment has an expected residual value of $53 million.

Prepare the two January 1, 2020 journal entries for The Northern Edison Company.