Terms of a lease agreement and related facts were as follows:

1. The lease asset had a retail cash selling price of $124,000. Its useful life was six years with no residual value (straight-line depreciation).
2. Annual lease payments at the beginning of each year were $25,883, beginning January 1.
3. Lessors implicit rate when calculating annual rental payments was 10%.
4. Costs of $2,561 for legal fees for the lease execution were the responsibility of the lessor.

Required: Prepare the appropriate entries for the lessor to record the lease, the initial payment at its beginning, and at the December 31 fiscal year-end under each of the following three independent assumptions:

1. The lease term is three years and the lessor paid $124,000 to acquire the asset (operating lease). 2. The lease term is six years and the lessor paid $124,000 to acquire the asset (sales-type lease). Also assume that adjusting the lease receivable (net investment) by initial direct costs reduces the effective rate of interest to 9%. 3. The lease term is six years and the lessor paid $97,000 to acquire the asset (sales-type lease).

Required 1

1. 01/01: Record the gross lease revenue received by lessor.

2. 01/01: Record the negotiating costs incurred by lessor.

3. 12/31: Record the lease revenue for lessor.

4. 12/31: Record the cost of the lease to the lessor.

5. 12/31: Record the depreciation for lessor.

Required 2

1. 01/01: Record the beginning of the lease for lessor.

2. 01/01: Record the negotiating costs incurred by lessor.

3. 01/01: Record the gross lease revenue received by lessor.

4. 12/31: Record the interest revenue for lessor.

Required 3

1. 01/01: Record the beginning of the lease for lessor.

2. 01/01: Record the negotiating costs incurred by lessor.

3. 01/01: Record the gross lease revenue received by lessor.

4. 12/31: Record the interest revenue for lessor.