On January 1, 2020,Splish BrothersCo. leased a building toSunlandInc. 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 $3,100,000(unguaranteed).

2.The leased building has a cost of $3,600,000and was purchased for cash on January 1, 2020.

3.The building is depreciated on a straight-line basis. Its estimated economic life is50years with no salvage value.

4.Lease payments are $280,000per year and are made at the beginning of the year.

5.Sunlandhas an incremental borrowing rate of6%, and the rate implicit in the lease is unknown toSunland.

- Your answer is partially correct. Prepare the journal entries that Splish Brothers 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 Title: and Explanation Debit Credit 1/1/20 t Buildings 3,600,000 | Cash | | 3,600,000 (To record cost of the building) 1/1/20 Cash 280,000 Unearned Lease Revenue 280,000 (To record receipt of lease payment) [ 12/31/20 9] Unearned Lease Revenue l I 280,000 Lease Revenue 280,000 (To record the recognition of the revenue each period) [ 12/31/20 6] Depreciation Expense 72,000 72,000 l Accumulated Depreciation (To record depreciation expense on the leased asset) Your Answer Correct Answer - Your answer is partially correct. Prepare the journal entries that Sun land should make in 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e3. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit 1/1/20 3 Right-of-Use Asset 2,184.473 Lease Liability 2,184,473 (To record the lease) l 1/1/20 Lease Liability 280,000 Cash 280,000 (To record lease payment) l 12/31/20 Lease Expense 280,000 Right-of-Use Asset 116,266 Lease Liability 116,266 eTextbook and Media (c) X Your answer is incorrect. If Sunland paid $25,000 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? Right-of-use asset $ 2,209,437 eTextbook and Media List of Accounts Save for Later Attempts: 1 of 3 used Submit