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Return to question On January 1, 2018 Rick's Pawn Shop leased a truck from Chumley Motors for a six-year period with an option to extend the lease for three years. Rick's had no significant economic incentive as of the beginning of the lease to exercise the 3-year extension option. Annual lease payments are $22,000 due on December 31 of each year, calculated by the lessor using a 7% discount rate. The expected useful life of the asset is 9 years and its fair value is $129,000. Assume that at the beginning of the third year, January 1, 2020, Rick's had made significant improvements to the truck whose cost could be recovered only if it exercises the extension option, creating an expectation that extension of the lease was "reasonably certain." The relevant interest rate at that time was 8%. (FV of $1. PV of $1. FVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare the journal entry, if any, at the beginning of the third year for the lessee to account for the reassessment 2. Prepare the journal entry, if any, at the beginning of the third year for the lessor to account for the reassessment. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the journal entry, if any, at the beginning of the third year for the lessee to account for the reassessment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate and final answers to nearest whole dollar.) No General Journal Credit Date January 01, 2020 Right-of-use asset Lease payable Debit 51.908 1 51.908 X Required Required 2 >