Recording Operating Lease Entries-Lessor On January 1, 2020, Merick Inc. purchased a building for $4 million to be leased. The building is expected to have a 45-year life with no salvage value. The building was leased immediately by Kregor Construction for $260,000 a year payable January 1 of each year starting January 1, 2020. The lease term is five years with no renewal or purchase option reasonably expected to be exercised. There are no uncertainties surrounding collection. The implicit rate of the lease is 7% known by Kregor Construction. Required a. How would Merick Inc. classify the lease? b. Prepare the entries for Merick Inc. for 2020. Note: Round your answers to the nearest whole dollar. Date Account Name Dr. Jan. 1, 2020 cr. Note: Round your answers to the nearest whole dollar. Account Name Dr. cr. Date Jan. 1, 2020 To record receipt of lease payment Dec. 31, 2020 To record revenue Dec. 31, 2020 To record depreciation c. Prepare the entries for Merick Inc. to record legal fees of $2,000 incurred on January 1, 2020, for the execution of the lease and the related adjusting entry on December 31, 2020. Date Account Name Dr. Cr. Jan. 1, 2020 Dec. 31, 2020