On January 1, 2020, Sunland Company contracts to lease equipment for 5 years, agreeing to make a payment of $105,519 at the beginning of each year, starting January 1, 2020. The leased equipment is to be capitalized at $440,000. The asset is to be amortized on a double-declining-balance basis, and the obligation is to be reduced on an effective-interest basis. Sunlands incremental borrowing rate is 6%, and the implicit rate in the lease is 10%, which is known by Sunland. Title to the equipment transfers to Sunland at the end of the lease. The asset has an estimated useful life of 5 years and no residual value.

Prepare the journal entries that Sunland should record on January 1, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to 0 decimal places, e.g. 5,275.)

Date	Account Titles and Explanation	Debit	Credit
January 1, 2020	enter an account title To record the lease	enter a debit amount	enter a credit amount
	enter an account title To record the lease	enter a debit amount	enter a credit amount
	(To record the lease.)
	enter an account title To record lease payment	enter a debit amount	enter a credit amount
	enter an account title To record lease payment	enter a debit amount	enter a credit amount
	(To record lease payment.)

Prepare the journal entries to record amortization of the leased asset and interest expense for the year 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)

Date	Account Titles and Explanation	Debit	Credit
December 31, 2020	enter an account title To record amortization of the leased asset	enter a debit amount	enter a credit amount
	enter an account title To record amortization of the leased asset	enter a debit amount	enter a credit amount
	(To record amortization of the leased asset.)
December 31, 2020	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount

Prepare the journal entry to record the lease payment of January 1, 2021, assuming reversing entries are not made. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to 0 decimal places, e.g. 5,275.)

Date	Account Titles and Explanation	Debit	Credit
January 1, 2021	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount

What amounts will appear on the lessees December 31, 2020, balance sheet relative to the lease contract?

How would the value of the lease liability in part b change if Sunland also agreed to pay the fixed annual insurance on the equipment of $2,000 at the same time as the rental payments? (Round answers to 0 decimal places, e.g. 5,275.)