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The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Novak Company, a lessee. January 1, $121,928 Commencement date Annual lease payment due at the beginning of each year, beginning with January 1, Residual value of equipment at end of lease term, guaranteed by the lessee Expected residual value of equipment at end of lease term Lease term Economic life of leased equipment Fair value of asset at January 1, Lessor's implicit rate Lessee's incremental borrowing rate $50,000 $45,000 6 years 6 years $626,000 9 % 9 % The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment. Click here to view factor tables. Your answer is partially correct FI Question 9 of 11 0.65 12 1 STOGO Annual Lease Payment Plus GRV Lease Amortization Schedule Interest on Liability Reduction of Lease Liability Lease Liability i $ i $ i $ 6. 121928 121928 50 121928 45366 76562 4 121928 38476 83452 3 121928 30965 90963 2: 22779 99149 121928 1 121928 13855 108073 50000 4129 45871 155570 $ 625998 781568 $ e Textbook and Media List of Accounts Bi Prepare all of the journal entries for the lessee for and 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. (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 for the amounts. Round answers to O decimal places e.g. 5,275. Record journal entries in the order presented in the problem.) e Account Titles and Explanation Debit Credit 20 v Leased Equipment 626000 Lease Liability 626000 (To record the lease.) 120 v Lease Liability 121928 Cash 121928 (To record first lease payment.) 020 Interest Expense 45366 45366 Interest Payable (To record interest.) 96000 020 Depreciation Expense 96000 Accumulated Depreciation-Capital Leases (To record amortization.) E (To record amortization.) 21 Lease Liability 121928 Cash 121928 (To record second lease payment.) 021 Interest Expense 38476 Interest Payable 38476 (To record interest.) 021 v 96000 Depreciation Expense 96000 Accumulated Depreciation-Capital Leases (To record amortization.) e Textbook and Media List of Accounts x Your answer is incorrect. Suppose Novak 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? Right-of-use asset $ Lease Liability $ What if Novak prepaid rent of $5,000 to Faldo? Right-of-use asset $ Lease Liability $ e Textbook and Media List of Accounts O 8