Seuss & Company leased equipment from First Title Leasing Corp and the following information is relevant:

First Title Leasing purchased the equipment for 520,000 $

Annual payments beginning 1/1/X3

Annual payments equal 164,000 $ Thereafter payments for the next calendar year will be made on this date each year December 31

Lease term 3

Estimated economic life 4

Discount/Interest Rate 2%

Year end December 31

The lease is non-cancelable First Title Leasing routinely leases this type of equipment

1.) Compute the present value of the minimum lease payments.

2. )Using the current lease accounting guidance the present value of the minimum lease payments for this lease constitute "substantially all" of the fair market value of the asset.

3.) Using the current lease accounting guidance this lease term is for a "major part" of the asset's estimated useful life.

4.) Fill in the Lease Payable amount for the journal entry required on 12/31/X3.

5.) Fill in the Interest Expense amount for the journal entry required on 12/31/X3.

6.) Fill in the Cash amount for the journal entry required on 12/31/X3.

7.) Assume that the payment on 12/31/X3 is paid on 1/1/X4 instead. From the LESSEE'S perspective fill in the missing journal entry leg for the entry required on 12/1/X3:

??? XXX

Accrued Interest Payable XXX

8.) Continue the Assumption that the payment on 12/31/X3 is paid on 1/1/X4 instead. From the LESSEE'S perspective fill in the missing journal entry leg for the journal entry required on 1/1/X4: Lease Payable XXX

??? XXX

Cash XXX

9.) COMPUTE THE YEARLY AMORTIZATION EXPENSE ON THE RIGHT TO USE ASSET.

10.) The LESSEE should amortize the right to use asset over the estimated economic life when: