Recording Entries for Operating Lease Lessee

On January 2, 2020, Wayne Inc. signed an eight-year lease for office space for $24,000 annually, with the first payment due immediately. Wayne has the option to renew the lease for an additional four-year period on or before January 2, 2028, at market lease rates at the time of renewal. Wayne intends to evaluate rental options at the time of the option to renew. The remaining economic life of the office is 30 years. Wayne Inc. is not aware of the implicit rate of the lease but has an incremental borrowing rate of 7%. Wayne Inc. paid $1,000 on January 2, 2020, for initial direct lease costs.

c. Prepare an amortization schedule of the right-of-use asset.

Date	Straight-Line Expense	Interest on Liability	Amortization of Right-of-Use Asset	Right-of-Use Asset
Jan. 2, 2020
Jan. 2, 2020
Jan. 2, 2021
Jan. 2, 2022
Jan. 2, 2023
Jan. 2, 2024
Jan. 2, 2025
Jan. 2, 2026
Jan. 2, 2027