PROBLEMS P21-1 (1.02.1) (Lessee Entries, Finance Lease) The following facts pertain to a non-cancelable lease agreement between Faldo Izasing Company and Vance Company, a lessee, Commencement date Annual lease payment due at the beginning of each year, beginning with January 1, 2017 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, 2017 Lessor's implicit rate Lessee's incremental borrowing rate January 1, 2017 $113.86: $50,000 $15.000 6 years 6 years $600,000 8% 8 The asset will revert to the lessor at the end of the lease term. The desse uses the straight-line amortization 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 journal entries for the lessee for 2017 and 2018 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 lense. 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 Faldo? P21-010