On January 1, 20x1, Winslow signed a lease giving it the right to use a drop forge owned by Port Angeles for 2,000 hours per year for 8 years.

The lease requires Winslow to pay $20,000 per year on December 31, 20x1-20x4 and $26,000 per year on December 31, 20x5-20x8.

The drop forge has a life of 20 years and a fair value of $200,000.

Winslows incremental rate was 8% on January 1, 20x1, and 10% on January 1, 20x5.

Winslow and Port Angeles modified the lease on January 1, 20x5. Under the modified lease terms Winslow will pay Port Angeles $15,000 per year on December 31, 20x5-20x8 to use the drop forge for 1,200 hours per year.

1. Prepare the entry needed by Winslow to record the lease modification on

January 1, 20x5.