P21.1 (LO 2, 4) (Lessee Entries, Finance Lease) The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Vance Company, a lessee. Commencement date Annual lease payment due at the beginning of January 1, 2020 each year, beginning with January 1, 2020 $113,864 Residual value of equipment at end of lease term, guaranteed by the lessee 350,000 Expected residual value of equipment at end of lease term $45,000 Lease term 6 years Economic life of leased equipment 6 years Pair value of asset at January 1, 2020 $600,000 Lessor's implicit rate Lessee's incremental borrowing rate The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amorti. zation for all leased equipment Instructions a. Prepare an amortization schedule that would be suitable for the lessee for the lease term. b. Prepare all of the joumal entries for the lessee for 2020 and 2021 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee's annual accounting period ends on December 31 c. Suppose Vance received a lease incentive of $5,000 from Faldo Leasing to enter the lease. How would the initial measurement of the lease liability and right-of-use asset be affected? What if Vance prepaid rent of $5,000 to Raido 89