On the first day of its accounting year, Lessee Inc. leased certain property at a semiannual payment of $60,000 receivable at the beginning of each period for 8 years. The first payment was paid immediately. The leased property, which is new, cost $1,100,000 and has an estimated useful life of 10 years and no guaranteed residual value. The lessee's incremental borrowing rate is 7% and the lessee is not aware of the lessor's implicit rate.

How would Lessee Inc. classify the lease?

What balances (account titles, amounts) appear on Lessee Inc.'s balance sheet at the end of the first year, related to the lease?

Note:Round amounts to the nearest whole dollar.

What balances (account titles, amounts) appear on Lessee Inc.'s income statement for the first year, related to the lease?

• Note:Round amounts to the nearest whole dollar.
• Note:List expenses in alphabetical order based upon the first letter of the account name.